Saudi Aramco is to take a 20 percent slice of Reliance Industries’ refining and petrochemical businesses.
The terms of the deal are yet to be finalised, but company officials said Reliance will get roughly $15 billion, including some debt adjustments, for the 20 percent stake when the sale closes later this year.
The deal also includes a long-term agreement for Saudi Aramco to supply the joint venture assets with 500,000 barrels per day (b/d) of crude oil.
Alan Gelder, Vice President Refining and Chemicals, Wood Mackenzie, said: “Our analysis indicates that the total earnings from the combined refinery sites in India are the highest in Asia outside the mega-refiners of Sinopec and PetroChina.
“Crude supplies of 500,000 b/d represents about 40 percent of Reliance’s crude intake, significantly higher than the stake taken, although Saudi Aramco historically supplied 20 percent of Reliance’s crude oil requirements.”
He added: “The deal is further evidence that Saudi Aramco is executing on its long-term strategy to increase its refining and petrochemical capacity.
“This strategy is being achieved through a combination of project and acquisitions, with this acquisition following on from last year’s acquisition of SABIC and SASREF, and the memorandum of understanding Aramco signed this year to acquire a 9 percent stake in Zhejiang Petrochemical’s 800,000 b/d integrated refinery and petrochemical complex in Zhoushan, China.
“Saudi Aramco continues to show keen interest in accessing the Indian market, which has the strongest long-term growth prospects.
“Aramco is also demonstrating discipline in targeting strongly competitive assets that are well placed, through petrochemical integration, to be sustainable through the energy transition.”
Reliance’s refining and petrochemicals assets include 1.2 million b/d of highly-sophisticated refining assets in North-West India. Both refining sites are in Jamnagar and heavily integrated with petrochemicals. Reliance also has a world-leading position in polyester and intermediates, as well as steam crackers and polyolefins capacity at another four locations in India.