Saudi Aramco said that is still looking to crack a deal of buying a stake in the refining and chemicals business of Reliance Industries worth $15 billion, despite the reduction in oil prices that has forced it to cut-off its investment spending.
In mid-July, the shares of Reliance witnessed a fall after Chairman Mukesh Ambani delayed a transaction ‘due to unforeseen circumstances in the energy market and the Covid-19 situation.’
Cracking a deal with Reliance would certainly help the world’s biggest crude exporter in joining the league of top chemical makers and oil refiners. The state-owned Aramco is one of the major suppliers of crude to India and on the other hand, Reliance sells gasoline and other petroleum products to the kingdom.
On Sunday, the Chief Executive Officer of Aramco, Amin Nasser said one a call with reporters, ‘We are still in discussion with Reliance. The work is still on. We will update our shareholders in due course about the Reliance deal.’
It was reported by Aramco on Sunday that the net income of the second –quarter was 75% lower compared to that of the previous year. It is due to the approx. 33% drop in oil prices in 2020. The COVID-19 pandemic has put a halt on travel and business, decreasing the demand for crude and fuel.
Ambani who has climbed his way to the fourth-richest person of the world, said last year that Aramco was ready to purchase a 20% stake in the refining and petrochemical business of his company, which was worth $75 billion.
The Reliance transaction would have helped Aramco in reaching its ultimate goal of increasing the refining capacity to more than 8 million barrels a day – double compared to the current capacity. Its refining capacity at the end of the last year was 3.6 million, which also included fully-owned plants and stakes in joint ventures
Officially known as Arabian Oil Co., the company is working to begin the 400,000 barrel-a-day Jazan refinery on the southern Red Sea coast of Saudi Arabia this year. The company also owns the biggest refiners in the United States and various plants in countries like Japan and South Korea. It is also planning several Chinese ventures.
Reliance has raised approximately $30 billion through investments into its digital unit Jio Platforms Ltd. from giant tech companies like Facebook Inc. and Google as well as selling shares to existing stakeholders, which has infused the company’s need for a cash infusion.
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