Saudi Aramco and Reliance Industries sign non-binding LoI to acquire a 20% stake in company’s oil & chemicals division

Saudi Aramco’s potential 20% stake is based upon an Enterprise Value of US$ 75bn for the O2C division.

Aug 13, 2019 03:08 IST India Infoline News Service

RIL, Reliance Industries
Saudi Aramco and Reliance Industries Limited (RIL) have 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, the company said on Monday.

Saudi Aramco’s potential 20% stake is based upon an Enterprise Value of US$ 75 billion for the O2C division. This would be one of the largest foreign investments ever made in India, the company said on 42nd Reliance Industries' AGM.

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.

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 definitive agreement is executed.

Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited 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.”  

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