RIL Saudi Aramco deal: Saudi Aramco to buy 20 percent stake in Reliance oil to chemical business

RIL Saudi Aramco deal: The RIL-Saudi Aramco deal would be one of India’s largest foreign direct investment deals to date.

Aug 13, 2019 09:58 IST
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RIL Saudi Aramco deal: Saudi Aramco is set to acquire 20 percent stake in RIL oil refinery and chemical business at a value of $75 billion or over 5.3 lakh crore. The announcement was made by Reliance Industries Limited (RIL) Chairman Mukesh Ambani during the 42nd Annual General Meeting of Reliance Industries on August 12.

The RIL Saudi Aramco deal would be one of India’s largest foreign direct investment deals to date. Under the deal, Saudi Aramco will buy 20 percent stake in a proposed special purpose vehicle (SPV) housing RIL’s twin refineries as well as its petrochemical complex.

Saudi Aramco has also agreed to supply 5,00,000 barrels per day of crude oil to RIL’s twin refineries at Jamnagar in Gujarat on a long-term basis. RIL operates two refineries in Jamnagar, Gujarat, which have a total capacity of 68.2 million tonnes per annum. The Jamnagar Refinery is one of the world’s largest oil refining facility. It can process 1.4 million barrels per day (BPD) and plans to expand its capacity to 2 million BPD by 2030.

RIL Saudi Aramco: Background

The RIL oil-to-chemical business was formed by combining refining and petrochemicals businesses. The division coverts petroleum into chemicals and it achieved revenue worth Rs 5.7 lakh crore in FY19.

Saudi Aramco, on the other hand, is a Saudi Arabian national petroleum and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco is one of the world’s largest oil companies by revenue. It is also reported to be one of the most profitable companies in the world.

Saudi Arabia is looking to grab a stronghold in India, the world's fastest-growing fuel market to get a captive customer for its crude oil. Crude oil is the basic raw material required for the manufacturing of petrochemicals. India has a refining capacity of 247.6 million tonnes, which exceeds the demand of 206.2 million tonnes. Besides, Saudi Aramco is also looking to retailing fuel in India, as a refinery in India would help export fuel to other oil deficit nations in Europe and America.

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