Saudi Aramco and India's Reliance Industries have scrapped plans for the Saudi oil giant to invest around $15 billion in buying 20 percent in Reliance's oil-to-chemicals business due to shifting priorities of the Indian oil to telecoms conglomerate.
Two years ago, in August 2019, Saudi Aramco and Reliance Industries signed a non-binding letter of intent, under which Aramco was set to buy 20 percent in the oil to chemicals division of Reliance Industries. At an enterprise value of $75 billion for the entire division, the stake that Aramco would have bought would have been worth around $15 billion.
In light of changed priorities, the companies have agreed to re-evaluate this plan.
"Due to evolving nature of Reliance's business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in O2C business in light of the changed context," Reliance Industries said late last week.
"Saudi Aramco and Reliance are deeply committed to creating a win-win partnership and will make future disclosures as appropriate. RIL shall continue to be Saudi Aramco's preferred partner for investments in the private sector in India and will collaborate with Saudi Aramco & SABIC for investments in Saudi Arabia," Reliance said.
Aramco, for its part, said in a statement carried by Bloomberg that it would "continue to evaluate new and existing business opportunities with our potential partners" and that "India offers tremendous growth opportunities over the long term."
Reliance Industries plans to invest more than $10 billion in three years in a new business unit that will build solar module, battery storage, electrolyser, and fuel cell factories, chairman Mukesh Ambani told the group's annual general meeting in June this year. Reliance plans to build the Dhirubhai Ambani Green Energy Giga Complex on 5,000 acres in Jamnagar. This, Ambani said, will be one of the world's largest such integrated renewable energy manufacturing facilities.
By Charles Kennedy for Oilprice.com
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