Saudi Investment endorses potential of India
Saudi Aramco is making India’s largest foreign investment of US$15 billion by taking a 20% stake in Reliance Industries Limited’s (RIL) Oil to Chemicals (O2C) division comprising the Refining, Petrochemicals and fuels marketing businesses.
The cash-flush Saudi Aramco has agreed to a non-binding Letter of Intent (LOI) regarding a proposed investment in RIL.
Saudi Aramco’s potential 20% stake is based upon an Enterprise Value of US$75 billion for the O2C division, making it one of the largest foreign investments ever made in India, said a joint statement from the two groups on 12 August 2019.
Saudi Aramco and RIL have a long-standing crude oil supply relationship of over 25 years.
Saudi Aramco, rated as the world’s largest and lowest cost-per-barrel producer of crude oil, is geographically close to India and offers a wide range of crude supply options.
To date it has supplied approximately two billion barrels of crude oil for processing at RIL’s Jamnagar refinery, which is the largest and most complex petroleum hub in the world, with deep integration of refining and petrochemical activities across multiple manufacturing facilities.
The proposed investment would result in Saudi Aramco supplying 500,000 BPD of Arabian crude oil to the Jamnagar refinery on a long-term basis.
Welcoming Saudi Aramco investment, RIL Chairman and Managing Director Mukesh Ambani said “We have a long-standing crude oil relationship with Saudi Aramco, and we would be happy to see this further strengthened with this investment.
“Saudi Aramco’s interest is a strong endorsement of the quality of our assets and operations as well as of the potential of India.”
Under the non-binding LOI, the proposed investment is subject to due diligence, and the executed definitive agreement will be subject to regulatory and other customary approvals.
The parties will make an announcement once a definitive agreement is executed. fiinews.com