Saudi Arabia's Aramco in talks to buy stake in refining business of India's Reliance
State oil giant Saudi Aramco, the world's biggest oil producer, is in talks to buy a minority stake in the refining and petrochemicals businesses of India's Reliance Industries Ltd, sources familiar with the matter said on Wednesday.
The Times of India reported earlier that Aramco was in talks to buy a stake of up to 25 per cent, which could be worth around $10-15 billion, valuing the Indian company's refining and petrochemicals businesses at some $55-60bn.
Aramco's discussions with Reliance were “serious”, one source said. Another source said talks with Reliance were so far for a 25pc stake.
Aramco and Reliance declined to comment.
Reliance, controlled by Asia's richest man, Mukesh Ambani, is India's biggest refining and petrochemicals company and runs a 1.4 million barrels per day refining complex at Jamnagar in western India. It plans to expand capacity to 2m bpd by 2030, according to plans shared with the Indian government.
Aramco is expanding its refining and petrochemical business globally by signing new deals and boosting the capacity of its existing plants.
Last year, Aramco and the United Arab Emirates' (UAE) national oil company, ADNOC, teamed up with state-run Indian refiners in a plan to build a 1.2m bpd refinery and petrochemical project in Maharashtra state.
However, the planned refinery faces delays, as thousands of farmers have refused to surrender land for it and the Maharashtra government is looking to move the plant's location.
Saudi Crown Prince Mohammed bin Salman visited India in February and said then that he expected investment opportunities worth more than $100b there over the next two years.
Ambani has travelled to Saudi Arabia at least twice since December, discussing joint investment among other issues with Aramco's chief executive, Amin Nasser.
Comments (37) Closed
With this single investment Saudi Aramco invests about 10 to 15 billion USD, that too for 25% stack! in India. Good job.
As the country grows economically, it attracts FDI which can be invested in other areas. Well done Reliance in attracting Aramco to invest!
That's how international relations should be. On an equal, win-win basis.
This news will burn a few hearts here!!!!
Big Man Dealing Big.
Saudi investing big in India...they know the future.
India business news gets covered here. Thanks.. Dawn
unlock the value, good for shareholders.
These are conservative estimates as per currrent Book Value norms RIL is valued over $ 100 Bn. Saudis will ultimately end up with around $ 25BN investment in RIL only and another $ 75 BN in other fields including infrastructure.
This will add 15 billion USD to India’s forex reserves!
Talks with India materialises for most due to ease of doing business
This will be huge transaction
in the era of globalisation, there is no role of religion...but only economy. Money buys brotherhood.
Nice. this will make india and saudi closer than ever. Good.
Increasing influence of Muslim countries in India will be good for the down trodden Muslim minority there.
This is what Modi can do. Undoubtedly Congress will cry foul over this deal too that the NDA is favouring Ambani but the reality is Ambani is as Indian as the Congress First Family of Nehru and Indians are quite happy that a fellow Indian has breached a list dominated previously by the Western world & the Middle East. Ofcourse, the losers (Congress supporters & Neo-Converts) are deeply unhappy at this development.
Slowly and steadily the $ flow into India through FPI and FDI is rising, based on the enormous economic potential of the country. Such is the exuberance among global investors that the benchmark stock Index NIFTY is trading at a PE of 29, the costliest in the world. The Midcap and Smallcap indices are trading at even higher valuations. India is also producing the largest number of Startups, such that three/four of them are turning into Unicorns(valuation above $ 1 Bn) every year. With better political management and quality of governance, India has the potential to grow its GDP at 10% over decades. The digitization of the Indian economy is complete and the country can now cut down corruption and red tape thereby reduce wastage and leakage, directing subsidies and other social benefits directly into citizens bank accounts. Every country wants to gain some share in this fastest growing major market which India could well leverage to increase its clout in global fora.
With increase in shale oil production and export of oil from USA, many of the OPEC members are looking at buyers of their crude on long term basis. Minority stake in RIL guarantees them almost 400K per day supply of their crude to the refinery or essentially 10% of their daily export of crude in today’s conditions. Way to go India and KSA and is possible because dynamic leaders like Thiru Modiji
@Feroz, what is stopping us from doing the same.
@Anwar Amjad, This is not a loan, it is an investment in a successful business. It does not increase Saudi influence in India.
In any case, neither Saudis nor UAE believe the myth that Muslims are downtrodden in India or else they would not have given the highest civilian award to Indian PM Narendra Modi.
Pak Govt not able to market CPEC properly, otherwise all the investment would have got diverted to Pakistan. Wait for the declaration of oil fields, World will have only only one route to invest, it is Pakistan.
Its bad move for world economic freedom, Reliance is the worlds largest refiner while Aramco is largest Crude supplier, with buying stake in Reliance Petro Refining Aramco will get some kind of monopoly in world petro Market. Government of india should reject it by any legal means
When someone invests, they also protect their investment. That's how allies are made in global form.
Dawn - Thank you for your coverage of Indian progress and news.
@Asltw, : Neither do KSA and UAE believe the story dished by some about Jammu & Kashmir.
@Asltw, - excellent answer
RIL is world's largest refiner. it should be in Indian hand
Looking from an investor point of view its not an attractive investment. with P/E of 29 or above its least desirable. Moreover since 2013 Reliance growth is totally debt driven thus valuing it at 100bn or even 60bn is not a reasonable valuation. We have already seen what happened to Etihad investment in Jet Airways, where books were manipulated to attract Qatar 25% investment in Jet Airways. But the cycle did not end there and further investment was DEMANDED to save it and Etihad ended up losing more than total 100% value of Jet Airways. Wait and see the fate of Aramco investment now.
Go, India go! Gun for that magic figure -10% growth. Under CEO Narendra Modi, India is becoming lean, fit and developing a voracious appetite for growth.
At that figure, India can double its GDP every 7-8 years!:) The swamp of poverty, the curse of centuries, will be lifted.:)
This means uninterrupted supply of crude oil to India
@Investor, Lots of other factors to be weighed before giving amy judgement. RoE, intrinsic value, market trajectory and definitely geo economy. Even at p/e above 100 can make its shareholders profitable for a long time IF they look for dividend . And obviously Aramco is not going to sale their share in near future because they r not small time profit hunter like you nor they r a holding company.
@Investor, RL generally buys crude from venezuella and iran. saud will get customer
@Anwar Amjad, recently i saw many videos on youtube reg inflation in pakistan. Forget the poor, even middleclass families are dying. First uplift these poor muslim people of ur country.
Reliance priority these days is Rafale deal, but that’s in turbulence, hence to accumulate as much funds as possible, it’s selling stakes in refineries. There could not be a better buyer than Saudi -Aramco.
I guess the next stop is India investing in Pakistan. Just saying
@Anwar Amjad, There is no influence of Saudi.It is a pvt. company transaction in India.
@kp, RIL is private investment not Government run dude. :D