Saudi Aramco and Reliance Industries are engaging in advanced-level talks for an all-stock deal in the refining and chemical business of the Indian oil-to-telecom giant. The deal could be worth $20-25 billion if the talks of purchasing a 20 per cent stake by Saudi Aramco in Reliance O2C Ltd. The talks between both the giants have been going on for the past two years. The delay was caused due to Covid-19 pandemic and falling crude oil prices. If the deal is signed, it’ll be Saudi Aramco’s first all-stock deal since the initial public offering (IPO). The deal also ensures a dedicated market for Aramco’s crude in India. As part of the deal, O2C will sign to buy 500,000 barrels of crude oil every day (28 per cent of the company’s Jamnagar refinery requirement) on a long-term basis from Aramco. Besides, the O2C business will be a value-creating proposition for both the giants as it focuses to channel 70 per cent of the refined crude for manufacturing high-value chemical products.
The relationship between the governments was also not smooth, which could also be the reason behind the delay in finalising the deal. India, the third-largest crude oil importer, and consumer, in May had asked public sector crude refining companies to scale up imports from the US and Africa following Saudi Arabia’s decision to raise the official selling price (OSP) of oil shipments to Asia. The action by Saudi, the world’s largest crude exporter, was largely conceived as retaliation to India’s plan to cut crude imports from the country. Saudi Arabian state oil producer Aramco had reported a nearly four-fold rise in second-quarter net profit this month. The record profit was reported following higher oil prices and a recovery in the demand. The O2C business of RIL includes the twin refineries in Gujarat’s Jamnagar and the adjacent petrochemicals complex, besides the petroleum retail joint venture of RIL-BP Plc.