Indian Reliance to Sell 20% of Refining Activities to Aramco
Reliance Industries Limited (RIL) is preparing to sell a 20 percent stake to Saudi Aramco of its refining and petrochemicals businesses.
While terms of the deal are yet to be finalized, Reliance will get roughly USD15 billion, including some debt adjustments for the 20 percent stake, P.M.S. Prasad, Executive Director of Reliance Industries said, adding that the two companies aim to close the deal by March 2020.
The deal will see Reliance buy up to 500,000 barrels a day of crude oil from Aramco, which would more than double the volumes that Reliance buys now, Reliance’s Prasad said.
Reliance Chairman Mukesh Ambani announced, during the Annual General Meeting in Mumbai, a deal with Saudi Aramco, which he termed as one of India's largest foreign direct investments to date.
Further, Aramco’s Senior Vice President of Finance Khalid al-Dabbagh confirmed the letter of intent had been signed but added that talks with Reliance were at “very, very early stages”.
Dabbagh also said that Aramco is ready for its IPO, but the timing will be decided by its sole shareholder, the Saudi government.
Earlier, Saudi Energy Minister Khalid al-Falih told Reuters that he was 'optimistic' that a deal between the two companies would work out.
The joint venture with Aramco will cover all of Reliance's refining and petrochemical assets, along with its 51 percent stake in its petroleum retail joint venture.
Last week, British oil major BP (BP.L) said it was forging a fuel retailing venture with Reliance, with the Indian company owning a 51 percent stake.
The Aramco deal is the latest in a series of moves by Reliance to sell non-core assets, or forge joint ventures, as it seeks to reduce debt that stood at 2,882.43 billion rupees (USD41.8 billion), as of June 30.
Ahead of the BP deal, Reliance last month announced the sale of the tower assets it owns through an investment trust to Canada's Brookfield Asset Management (BAMa.TO) for 250 billion rupees.
Sources this month also told Reuters that Reliance is in talks with the US e-commerce giant Amazon.com Inc (AMZN.O) to sell a stake in its retail venture. "The deal with Aramco along with Reliance's own earnings from refining and petrochemical operations will help the company reduce net debt to zero in two years," said Dixit of Elara.
Ambani himself laid out a more aggressive timetable, saying on Monday that the company has a very clear roadmap to becoming a zero net debt company within the next 18 months.