New Delhi: Saudi Aramco is in advanced talks for an all-stock deal to acquire a stake in Reliance Industries LimitedK oil refining and chemicals business, said people with knowledge of the matter.
Saudi Arabian firm in talks to buy about 20% stake in it Reliance Aramco’s shares are worth about $20 billion to $25 billion-the unit, the people said, asking not to be identified because the information is private.
People said Reliance, which is backed by Indian billionaire Mukesh Ambani, may sign a deal with Aramco in the coming weeks.
Reliance shares gained up to 2.6% in Mumbai after Bloomberg News reported.
A deal would create a closer alliance between the world’s largest oil exporter and one of the fastest growing consumers. Relations and trade between the two countries have grown in recent years as India seeks to bolster its energy security and Saudi Arabia has reduced its support for Pakistan over the disputed region of Kashmir. Riyadh and New Delhi extended their relationship to a “strategic partnership” in 2019.
This will seal more than two years of negotiations and mark Aramco’s first all-stock deal since its initial public offering in 2019.
Ambani confirmed talks the same year about a deal with a vested stake valuation of $15 billion. Discussions were delayed by the onset of the coronavirus pandemic and the fall in oil prices.
The energy market has since recovered, with crude oil prices jumping about 35% this year to nearly $70 a barrel. Aramco said due diligence was underway on a deal with Reliance last week.
A transaction would boost Aramco’s crude oil sales in India. For Reliance, it will help close the steady supply of oil to its giant refineries and make the Indian company a shareholder in Aramco. Based on Aramco’s market valuation of around $1.9 trillion, a transaction would give Reliance a stake of about 1%.
The details of the possible transaction are still being negotiated, people said, and talks could drag on or break.
A representative for Aramco declined to comment. The Saudi government’s Center for International Communication did not immediately respond to an email requesting comment.
Saudi target
A Reliance representative said the company has nothing to add other than Ambani’s remarks at the shareholders’ meeting in June, when the group appointed Aramco chairman Yasir Al-Rumayen to the board. Ambani had said that Reliance may finalize an investment deal with the oil producer this year.
The Saudi government sold 2% of Aramco in an IPO, raising about $30 billion. This is still the biggest first-time stock sale on record.
The de facto ruler, Crown Prince Mohammed bin Salman, said in April that the kingdom was in talks to sell a 1% stake in Aramco to a “leading global energy company”. He didn’t reveal what.
“This deal could be very important to strengthen Aramco’s sales in the country where this company resides,” Rajkumar said.
Saudi Arabia supplied 613,000 barrels of crude oil per day to India in July, which is about 10% of its total exports.
The transaction will help Aramco reach its goal of doubling its refining capacity from 8 million to 10 million barrels of crude oil per day.
The Saudi firm had 3.6 million barrels per day of capacity at the end of last year, including a stake in joint ventures.
Saudi Arabian firm in talks to buy about 20% stake in it Reliance Aramco’s shares are worth about $20 billion to $25 billion-the unit, the people said, asking not to be identified because the information is private.
People said Reliance, which is backed by Indian billionaire Mukesh Ambani, may sign a deal with Aramco in the coming weeks.
Reliance shares gained up to 2.6% in Mumbai after Bloomberg News reported.
A deal would create a closer alliance between the world’s largest oil exporter and one of the fastest growing consumers. Relations and trade between the two countries have grown in recent years as India seeks to bolster its energy security and Saudi Arabia has reduced its support for Pakistan over the disputed region of Kashmir. Riyadh and New Delhi extended their relationship to a “strategic partnership” in 2019.
This will seal more than two years of negotiations and mark Aramco’s first all-stock deal since its initial public offering in 2019.
Ambani confirmed talks the same year about a deal with a vested stake valuation of $15 billion. Discussions were delayed by the onset of the coronavirus pandemic and the fall in oil prices.
The energy market has since recovered, with crude oil prices jumping about 35% this year to nearly $70 a barrel. Aramco said due diligence was underway on a deal with Reliance last week.
A transaction would boost Aramco’s crude oil sales in India. For Reliance, it will help close the steady supply of oil to its giant refineries and make the Indian company a shareholder in Aramco. Based on Aramco’s market valuation of around $1.9 trillion, a transaction would give Reliance a stake of about 1%.
The details of the possible transaction are still being negotiated, people said, and talks could drag on or break.
A representative for Aramco declined to comment. The Saudi government’s Center for International Communication did not immediately respond to an email requesting comment.
Saudi target
A Reliance representative said the company has nothing to add other than Ambani’s remarks at the shareholders’ meeting in June, when the group appointed Aramco chairman Yasir Al-Rumayen to the board. Ambani had said that Reliance may finalize an investment deal with the oil producer this year.
The Saudi government sold 2% of Aramco in an IPO, raising about $30 billion. This is still the biggest first-time stock sale on record.
The de facto ruler, Crown Prince Mohammed bin Salman, said in April that the kingdom was in talks to sell a 1% stake in Aramco to a “leading global energy company”. He didn’t reveal what.
“This deal could be very important to strengthen Aramco’s sales in the country where this company resides,” Rajkumar said.
Saudi Arabia supplied 613,000 barrels of crude oil per day to India in July, which is about 10% of its total exports.
The transaction will help Aramco reach its goal of doubling its refining capacity from 8 million to 10 million barrels of crude oil per day.
The Saudi firm had 3.6 million barrels per day of capacity at the end of last year, including a stake in joint ventures.
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