Saudi Aramco-Reliance deal a ‘marriage made in heaven’
India’s Reliance Industries’ deal to sell a 20 percent stake in its oil-tochemicals business to Saudi Aramco is a “win-win” for the pair, say analysts.
Under the terms of the nonbinding deal, Reliance will get about $15 billion for the 20 percent stake, money that it will use to pare its massive debt load.
In exchange, it will buy up to 500,000 barrels a day of crude oil from Aramco, more than double its current purchase.
Reliance Chairman Mukesh Ambani said that the deal signified “perfect synergy between the world’s largest oil producer and the world’s largest integrated refinery and petrochemicals complex.”
Reliance has been on the lookout for strategic partners for its businesses to help it in its goal of reducing its nearly $42 billion debt, said Ajay Bodke, chief executive officer of portfolio management services at Prabhudas Lilladhar, a brokerage firm. It’s “a marriage made in heaven because you have the largest oil explorer in the world tying up with India’s largest oil-to-chemicals company,” he added.
The tie-up also helps Reliance secure its supplies and ensures Aramco that additional business as well.
Aramco has been beefing up its business in Asia, especially with some of the large importers of crude oil. With the US, the world’s largest consumer of energy, depending less on Saudi Arabia for oil, Aramco needs new markets to hedge its bets. India, one of the largest energy consumers in the world after the US and China, fits the bill.