Reliance to sell 20% stake to Saudi Aramco in one of India’s largest foreign investment deals

The partnership will cover all of Reliance’s refining and petrochemical assets

India’s Reliance Industries Ltd is set to sell a 20 per cent stake in its oil to chemicals business to Saudi Aramco in one of the largest foreign investments in the country, Reliance chairman Mukesh Ambani said on Monday.

“(This is) the biggest foreign investment in the history of Reliance,” Ambani said at the company’s annual general meeting in India’s financial capital Mumbai.

“It is also amongst the largest foreign investments ever in India.”

The deal valued the business at $75bn including debt, he said.

While terms of the deal are yet to be finalised, Reliance will get roughly $15bn, including some debt adjustments for the 20 per cent stake, P.M.S. Prasad, executive director of Reliance Industries said on Monday, adding the two companies aim to close the deal by March 2020.

Saudi Aramco, the world’s biggest oil producer, has been in talks with Reliance on the stake sale as it plans to secure new markets for its crude.

Saudi Aramco will also supply 500,000 barrels a day of crude oil on a long-term basis to RIL’s Jamnagar refinery, Ambani said.

“This signifies perfect synergy between the world’s largest oil producer and the world’s largest integrated refinery and petrochemicals complex,” he added.

Aramco is expanding its downstream, or refining, chemicals and marketing, footprint globally by signing new deals and boosting the capacity of its plants to secure new markets for its crude and reduce its risk to any downturn in oil demand.

For years, Aramco has been a regular crude supplier to Indian refiners via long-term crude contracts.

And while it owned stakes in refineries or storage assets in other key Asia markets such as China, Japan and South Korea as well as in the United States where it owns Motiva, the largest refinery in the U.S., it has not secured that same access in India, a fast-growing market for fuel and petrochemicals.

A source familiar with the talks said the potential deal would help Aramco boost its crude supply to Reliance by more than 50 per cent.

The partnership will cover all of Reliance’s refining and petrochemical assets, including its 51 per cent stake in the petroleum retail joint venture, he said.

Last week, Reliance announced that it was forming a fuel retailing joint venture with global oil major BP in which Reliance would own a 51 per cent stake.