Reliance Industries, Saudi Aramco to re-evaluate planned business tie-up

Indian conglomerate Reliance says the move stems from its greater push into new-energy and materials business.

The plan by Aramco, formally known as Saudi Arabian Oil Co., to take a 20% stake in Reliance’s oil-to-chemicals business was announced in August 2019, valuing that business at $US75 billion on an enterprise basis. Picture: Bloomberg

Reliance Industries Ltd. and Saudi Aramco are re-evaluating the planned $US15 billion investment by the Saudi state-owned company in the Indian conglomerate’s oil-to-chemicals business.

The decision to “mutually” re-evaluate the investment stems from Reliance’s greater push to enter new-energy and materials business, the company said late Friday.

In July, Reliance Industries Chairman Mukesh Ambani announced a more than 600 billion rupees ($US8.07 billion) investment that will be made in the next three years into a new-energy business in Jamnagar in India’s western state of Gujarat.

Jamnagar, which accounts for a major part of the oil-to-chemicals assets, is planned to be the centre for Reliance’s new businesses of renewable energy and new materials to support its commitment to net-zero emissions, the company said.

Reliance’s investments include the building of an integrated solar photovoltaic module factory, an advanced energy storage battery factory and a fuel-cell factory for converting hydrogen into motive and stationary power.

The plan by Aramco, formally known as Saudi Arabian Oil Co., to take a 20% stake in Reliance’s oil-to-chemicals business was announced in August 2019, valuing that business at $US75 billion on an enterprise basis.

“Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in O2C (oil-to-chemicals) business in light of the changed context,” Reliance said.

Reliance said that it will continue to be Aramco’s preferred partner for investments in the private sector in India, and that it will collaborate with Aramco and Saudi Basic Industries Corp., known as Sabic, on investments in Saudi Arabia.

Reliance is one of India’s largest private-sector companies by market capitalisation. The company’s consolidated turnover at the end of March was $US73.8 billion, and net profit was $US7.4 billion. Reliance’s business interests span from hydrocarbon exploration and production, to petroleum refining and marketing, petrochemicals, retail, and digital services.

The Wall Street Journal