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Saudi Aramco to acquire 20% stake in RIL's oil-to-chemical biz

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Saudi Aramco signed a non-binding letter of intent to acquire a 20% stake in the oil to chemicals division of Reliance Industries valued at an enterprise value of $75 billion.

Reliance Industries (RIL) held its 42nd annual general meeting (AGM) today, 12 August 2019.

Saudi Aramco and Reliance Industries (RIL) today agreed to a non-binding letter of intent (LoI) regarding a proposed investment in the oil to chemicals (O2C) division comprising the refining, petrochemicals and fuels marketing businesses of RIL. Saudi Aramco's potential 20% stake is based upon an enterprise value of $75 billion for the O2C division. This would be one of the largest foreign investments ever made in India.

Saudi Aramco and RIL have a long-standing crude oil supply relationship of over 25 years. Saudi Aramco is the world's largest and lowest cost-per-barrel producer of crude oil, is geographically close to India, and offers a wide range of crude supply options. To date it has supplied approximately 2 billion barrels of crude oil for processing at RIL's refinery at Jamnagar.

RIL's Jamnagar refinery is the largest and most complex refinery in the world, with deep integration of refining and petrochemical activities across multiple manufacturing facilities. The proposed investment would result in Saudi Aramco supplying 500 KBPD of Arabian crude oil to the Jamnagar refinery on a long term basis.

RIL's chairman and managing director, Mukesh Ambani, said: "I am truly delighted to welcome Saudi Aramco, one of the largest business enterprises in the world, as a potential investor in our Oil to Chemicals division. We have a long-standing crude oil relationship with Saudi Aramco and we would be happy to see this further strengthened with this investment. Saudi Aramco's interest is a strong endorsement of the quality of our assets and operations as well as of the potential of India."

Under the non-binding LoI, the proposed investment is subject to due diligence, and the executed definitive agreement will be subject to regulatory and other customary approvals. The parties will make an announcement once a definitiveagreement is executed.

On consolidated basis, RIL's net profit rose 6.8% to Rs 10104.00 on 21.9% rise in net sales to Rs 1,56,976 crore in Q1 June 2019 over Q1 June 2018.

Reliance Industries is engaged in hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and telecommunications.

Shares of RIL rose 0.87% to settle at Rs 1162 on Friday, 9 August 2019. Domestic equity market is shut today on account of Bakri Id.

The stock had underperformed the market over the past one month, falling 9.18% compared with 2.97% fall in the Sensex. The stock underperformed the market in past one quarter, sliding 7.42% as against Sensex's 0.06% fall. The stock had also underperformed the market in past one year, declining 4.59% as against Sensex's 1.16% fall.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, August 12 2019. 14:27 IST