Aramco eyes RIL arm stake for $25 bn
E Saudi Arabian m is discussing the chase of a roughly % stake in the iance subsidiary
Saudi Aramco is in nced talks for an all-stock to acquire a stake in Reliindustries Ltd.’s oil refinand chemicals business, le with knowledge of the er said. he Saudi Arabian firm is ussing the purchase of a hly 20% stake in the Reliunit for about $20 billion 5 billion-worth of Aramco es, the people said, asking o be identified because the rmation is private. Reli, which is backed by bilire Mukesh Ambani, could h an agreement with mco as soon as the coming ks, the people said. ares in Reliance extended s to as much as 2.6% in bai after the Bloomberg s report.
deal would forge a closer alliance between the world’s biggest oil exporter and one of the fastest-growing consumers. Ties and trade between the two countries have grown in recent years as India looks to bolster its energy security and Saudi
Arabia reduces its support for Pakistan over the disputed territory of Kashmir. Riyadh and New Delhi elevated their relationship to a “strategic partnership” in 2019.
It would seal more than two years of negotiations and mark
Aramco’s first all-stock deal since its initial public offering in 2019. Ambani confirmed talks about a deal with an implied stake valuation of $15 billion that same year. Discussions were delayed by the onset of the coronavirus pandemic and slump in oil prices.
Energy markets have since recovered, with crude prices jumping around 35% this year to almost $70 a barrel. Aramco said last week due diligence on a deal with Reliance was underway.
A transaction would boost Aramco’s sales of crude to India. For Reliance, it would help to lock in a steady supply of oil for its giant refineries and make the Indian company a shareholder in Aramco. Based on Aramco’s market valuation of about $1.9 trillion, a transaction would give Reliance a stake of around 1%.
Details of the potential transaction are still being negotiated, and talks could drag on longer or fall apart, the people said. A representative for Aramco declined to comment. The Saudi government’s Center for International Communication didn’t immediately respond to an email requesting comment.
A representative for Reliance said the company does not have anything to add beyond Ambani’s comments at the shareholders’ meeting in June, when the conglomerate appointed Aramco Chairman Yasir Al-rumayyan to the board. Ambani had said Reliance could finalize an investment deal with the oil producer this year.
The Saudi government sold 2% of Aramco in the IPO, raising almost $30 billion. It’s still the largest first-time share sale on record.
Crown Prince Mohammed bin Salman, the de facto ruler, said in April that the kingdom was in talks to sell a 1% stake in Aramco to a “leading global energy company.” He didn’t disclose which one.
“This deal could be very important in strengthening Aramco’s sales in the country where this company resides,” the prince had said.
Saudi Arabia shipped 613,000 barrels a day of crude to India in July, around 10% of its total exports.
The transaction would help Aramco reach its goal of more than doubling refining capacity to between 8 million and 10 million barrels of crude a day. The Saudi firm had 3.6 million barrels a day of capacity at the end of last year, including stakes in joint ventures.