India’s Reliance Industries (RIL) and Saudi Aramco have opted to shelve the $15 billion deal that would see the Saudi oil gaint take a 20% stake in RIL’s oil to chemicals (O2C) business.
The pair signed a “non-binding Letter of Intent” in August 2019 for the sale, but RIL released a statement over the weekend saying the deal had been withdrawn as the private-sector Indian conglomerate shifts its focus to renewables.
“Due to evolving nature of Reliance’s business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in O2C business in light of the changed context,” RIL said in a statement.
As a result, the application to separate the business into a new entity for Aramco to take its stake was withdrawn.
The O2C business comprises RIL’s 1.4 million barrels per day refinery complex at Jamnagar and 38.4 million tons per year of petrochemicals capacity.
When the deal was first announced, RIL valued its refining and chemicals operations at $75 billion including debt, implying a $15 billion valuation for Aramco’s 20% stake.
Aramco chairman, Yasir al-Rumayyan, who is also governor of Saudi Arabia’s Public Investment Fund (PIF), was named as an independent director on the RIL board in June.
Despite dropping Aramco’s stake plan, RIL said it will remain Aramco’s preferred partner for investments in India’s private sector and will collaborate with the Saudi energy giant on investments in the kingdom.
RIL committed to become net carbon zero by 2035 and hopes to recast itself as a clean energy enterprise with the development of the $8.2 billion Dhirubhai Ambani Green Energy Giga Complex at Jamnagar.
The plan involves building four plants — an integrated solar photovoltaic module factory, an energy storage battery plant, an electrolyser factory to produce green hydrogen and a fuel cell plant.