The much-talked about deal between Reliance Industries (RIL) and Saudi state-owned oil giant Aramco has finally happened. Speaking at RIL's 42th annual general meeting on Monday, Chairman Mukesh Ambani announced that Aramco has agreed to take a 20 per cent stake in the company's oil refinery and chemical business at an enterprise value of $75 billion (around Rs 5.32 lakh crore). This is among the largest foreign investments in India.
The Gulf behemoth, the world's biggest oil producer, has been looking to boost investment in refining and petrochemicals to secure new markets for its crude and sees growth in chemicals as central to its downstream strategy to reduce risk as oil demand slows. As part of the deal, Saudi Aramco will supply 500,000 barrels per day or 25 million tonnes per annum, of crude oil to RIL's twin refineries at Jamnagar in Gujarat. This is the world's biggest refining complex.
The total capacity of these two refineries is 68.2 million tonnes per annum and Ambani plans to expand its only-for-exports special economic zone (SEZ) refining capacity to just over 41 million tonne from current 35.2 million tonne. As per the deal announced by Ambani today, Saudi Aramco will take 20 per cent stake in a proposed special purpose vehicle (SPV) housing the twin refineries as well as the firm's petrochemical complex.
This development comes just days after RIL signed an agreement with British energy giant BP plc to form a new joint venture that will include a retail service station network and aviation fuels business across India. The JV will assume ownership of RIL's existing Indian fuel retail network of over 1,400 sites across India, which the partners aim to expand fourfold to 5,500 sites over the next five years.
"We expect to complete transactions with Saudi Aramco and BP within this financial year. These are expected to generate inflow of Rs 1.15 lakh crore," Ambani said at the AGM, adding that the company has a "clear roadmap to becoming a zero net debt company in next 18 months".
Meanwhile, Saudi Aramco - along with its partner Abu Dhabi National Oil Co (ADNOC) - has taken a 50 per cent stake in a planned $60 billion mega refinery-cum-petrochemical complex in Maharashtra in collaboration with a consortium of Indian oil PSUs. This signals its bullish outlook on India's energy demand. Like other major producers, the two Gulf entities are looking to lock in customers in the world's third-largest oil consumer through the investment. Saudi Aramco is also keen on retailing fuel in India. A refinery in India can also be a base for it to export fuel to deficit countries in Europe and the Americas.
With agency inputs
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