RIL, Aramco to re-evaluate investment in oil-to-chemical business – Times of India

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Mumbai: Reliance Industries (RIL) and Saudi Aramco has decided to “re-evaluate” the proposed $15 billion investment in the Indian company’s oil-to-chemical (O2C) business. Consequently, the country’s largest company by market value will withdraw its application with the National Company Law Tribunal (NCLT) for demerger of O2C business.
The revaluation follows RIL’s “evolving” energy business game, which includes recent moves into solar power. It also plans to make India a hub for low-cost solar manufacturing while aiming to become net carbon zero by 2035. In a media release issued late Friday, RIL said that, due to the evolving nature of its business portfolio, the company and Saudi Aramco Mutually determined that it would be “beneficial for both parties to re-evaluate the proposed investment in the O2C business in the light of the changed context”.

Two years ago, RIL announced that Saudi Aramco would acquire a 20% stake in RIL’s O2C unit for $15 billion. As part of the deal, Saudi Aramco will get a seat on RIL’s board and the right to appoint its executives to key managerial positions in the O2C unit. But the Saudi Aramco investment was delayed due to the pandemic and its impact on energy demand. However, the Indian company recently appointed Yasir Al-Rumayun, the chairman of Saudi Aramco and the governor of the Kingdom’s wealth fund, as an independent director on its board.
The engagement over the past two years has given both RIL and Saudi Aramco a greater understanding of each other, providing a platform for wider areas of cooperation, the Indian company’s statement read.
Analysts explained that Saudi Aramco may consider investing in RIL’s larger portfolio, which includes O2C and renewable energy and new materials businesses. The Indian company’s facility in Jamnagar, Gujarat, which forms a major part of RIL’s O2C assets, is envisaged to be the hub for its renewable energy and new materials game.
Like RIL, Saudi Aramco is also moving towards green energy. In June this year, RIL announced that it would invest Rs 75,000 crore in clean energy over three years. Later it bought Norway’s REC Solar and India’s Sterling & Wilson Solar. RIL’s Friday statement further said that it will continue to be Saudi Aramco’s preferred partner for investment in India’s private sector. RIL and the Kingdom have a relationship of more than two decades, with the former sourcing crude from Saudi Aramco for several years and later, through its wealth fund Public Investment Fund (PIF), investing in the Indian company’s retail, telecom ( Jio) and fiber-optic units.

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