Reliance-Aramco deal put off, both cos re-evaluate the contract

Hyderabad: Billionaire Mukesh Ambani's Reliance Industries Ltd has put on hold a proposed deal to sell a 20 per cent stake in its oil refinery and petrochemical business to Saudi Aramco for $15 billion as the Indian firm focuses on new energy business.

"Due to evolving nature of Reliance's business portfolio, Reliance and Saudi Aramco have mutually agreed that it would be beneficial for both parties to re-evaluate the proposed investment in O2C business in light of the changed context," according to a Reliance Industries statement on Friday.

It will continue to be Saudi Aramco's "preferred partner" for investments in India's private sector. Ambani had in company's annual general meeting of shareholders in August 2019 announced talks to sell a 20 per cent in the oil-to-chemicals (O2C) business, which comprises its two oil refineries at Jamnagar in Gujarat, petrochemical assets and 51 per cent stake in fuel retailing joint venture with BP, to the world's largest oil exporter. At that time, he had announced the deal would close by March 2020.

The companies missed the deadline blamed pandemic controlling restrictions, imposed towards the end of March 2020, for hampering due diligence. This year too, at the AGM, Ambani stated that the deal would close by the end of the year. At the same event, he also announced new energy forays including a plan for developing one of the largest integrated renewable energy manufacturing facilities in the world. The complex would consist of a solar photovoltaic module, battery, green hydrogen and fuel cell factories and cost Rs 60,000 crore. The firm had recently announced carving out the O2C business as a separate subsidiary to support strategic partnerships and new investors in order to accelerate its new energy and material plans. That process has now been halted.

Consequently, the current application with NCLT for segregating the O2C business from RIL is being withdrawn. The deep engagement over the last two years has given both Reliance and Saudi Aramco a greater understanding of each other, providing a platform for broader areas of cooperation. 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.

Saudi Aramco and RIL have a very deep, strong and mutually beneficial relationship, that has been developed and nurtured by both companies over the last 25 years. Both companies are committed to collaborate and work towards strengthening the relationship further in the years ahead.

Reliance recently unveiled its plans for the New Energy & Materials businesses by announcing the development of Dhirubhai Ambani Green Energy Giga Complex at Jamnagar. It will be amongst the largest integrated renewable energy manufacturing facilities in the world.

The Four Giga Factories which will be part of the complex will include:

• An integrated solar photovoltaic module factory for production of solar energy

• An advanced energy storage battery factory for storage of intermittent energy

• An electrolyser factory for production of green hydrogen and

• A fuel cell factory for converting hydrogen into motive and stationary power Jamnagar, which accounts for a major part of the O2C assets, is envisaged to be the centre for Reliance's new businesses of Renewable Energy & New Materials, supporting the Net-Zero commitment.