ENERGY

Saudi Aramco expands with $15 billion deal with India’s Reliance

For India, the deal amounts to one of the country’s largest foreign direct investments. (File photo: Reuters)

Saudi Aramco is buying 20% of Indian conglomerate Reliance Industries’ oil and chemicals business for about $15 billion, in a deal that gives it heft and diversity ahead of a long-awaited IPO.
 
For India, the deal amounts to one of the country’s largest foreign direct investments.
 
Reliance Chairman Mukesh Ambani on Monday told an annual meeting of shareholders that Aramco will also supply Reliance’s Jamnagar refineries with 700,000 barrels of oil a day on a long-term basis. The refining complex has the capacity to process 1.4 million barrels per day.
 
“This is the biggest foreign investment in the history of Reliance,” he said. “It is also amongst the largest foreign investments ever in India.”
 
The deal will help diversify the business operations of Aramco, which has been traditionally focused on pumping oil out of the Middle East.
 
Aramco is the most profitable in the world, posting bigger profits than the likes of Apple or Exxon and making it a potentially interesting investment target. On Monday, the company said it made $46.9 billion in the first half of this year, down about 11% from a year earlier due to a global decline in the price of crude oil.
 
Meanwhile, Reliance will also sell about half of its fuel retail business to global oil major BP for 70 billion rupees ($1 billion).
 
Last week, Reliance said it was forming a fuel retailing joint venture with BP in which Reliance would own a 51% stake.
 
Reliance’s deal with Aramco covers all of Reliance’s refining and petrochemicals assets as well as the remainder of the stake the company has in its fuel retailing business after selling 49% to BP, Ambani said.
 
Reliance’s existing 1,400-odd gasoline pumps, as well as 31 aviation fuel stations, will be transferred to the new joint venture in which BP will hold a 49% equity stake.
 
Reliance aims to expand the retail network to 5,500 gasoline pumps in the next five years, PTI said.

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Last Update: Monday, 12 August 2019 KSA 14:32 - GMT 11:32
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