Reliance, Saudi Aramco stake sale talks hit roadblock

New Delhi: Richest Indian Mukesh Ambani-led Reliance Industries’ talks to sell a minority stake in its refinery business to Saudi oil giant Aramco have hit a roadblock over valuation and deal structure, sources said.

Talks on Saudi Aramco picking up to 25 per cent stake in a proposed special purpose vehicle (SPV) housing the twin refineries of Reliance as well as the firm’s petrochemical complex have been stalled over valuation, they said.

Also, the Saudi firm has disagreed with Reliance over the transfer of some of the Rs 2,88,243 crore group debt to the SPV.

The two firms are likely to continue discussions after Reliance makes changes.

Reached for comments, a Reliance spokesperson said, “As a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis.”

“We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges,” he added.

The Saudi national oil company, which along with its partner UAE’s Adnoc has taken a 50 per cent stake in a planned USD 44-billion mega refinery-cum-petrochemical complex in Maharashtra by state-owned oil companies, has a bullish outlook on India’s energy demand; and is keen on investing here.

The discussions with Reliance Industries first came to light in December when Saudi Oil Minister Khalid al-Falih visited Mukesh Ambani.

Al-Falih, who has known Ambani for over a decade now, travelled to Udaipur that month to attend the pre-wedding festivities of Ambani’s daughter Isha’s marriage with Ajay Piramal’s son Anand.

During that visit, he also held talks with Ambani and he later tweeted: “We discussed opportunities for joint investments and cooperation in petrochemical, refining and communications projects.”

In January, Aramco Chief Executive Officer met Ambani, possibly as a follow-up of that meeting.
Reliance operates two refineries in Jamnagar, Gujarat, with a total capacity of 68.2 million tonnes per annum.

It plans to expand its only-for-exports special economic zone (SEZ) refining capacity to just over 41 million tonne from current 35.2 million tonne but does not have any plans to set up a new refinery in the country.

It is currently focused on expanding petrochemical and telecom business, industry sources said.

Saudi Arabia, on the other hand, is keen to get a foothold in the world’s fastest-growing fuel market to get a captive customer for the crude oil it produces.

Crude oil is the basic raw material for the manufacturing of petrochemicals.

Saudi Aramco, the world’s biggest oil company, and its partner Abu Dabhi National Oil Co (ADNOC) have picked up 50 per cent stake in a planned USD 44-billion refinery in Maharashtra but the project is facing problems in acquiring land due to protests from local politicians.

Aramco and ADNOC will together hold 50 per cent stake in the 60 million tonnes per annum (MTPA) refinery and adjacent 18 MTPA petrochemical complex planned to be built at Ratnagiri district of Maharashtra by 2025.

The two will supply half of the crude oil required for processing at the refinery.

Like other major producers, the two are looking to lock in customers in the world’s third-largest oil consumer through the investment. Kuwait is also looking to invest in projects in return for getting an assured offtake of their crude oil.

Saudi Aramco is also keen on retailing fuel in India. A refinery in India can also be a base for it to export fuel to deficit countries in Europe and the Americas.

India has a refining capacity of 247.6 million tonne, which exceeded the demand of 206.2 million tonne.