Saudi Aramco and Reliance Industries Sign a Non-Binding Letter of Intent to Acquire a 20% Stake in the Oil to Chemicals (O2C) Division of Reliance Industries Limited Valued at an Enterprise Value of US$ 75 Billion
Saudi Aramco and Reliance Industries Limited (RIL) have agreed to a non-binding Letter of Intent (“LOI”) regarding a proposed investment in the Oil to Chemicals (O2C) division comprising the Refining, Petrochemicals and fuels marketing businesses of RIL. Saudi Aramco’s potential 20% stake is based upon an Enterprise Value of US$ 75 billion for the O2C division. This would be one of the largest foreign investments ever made in India. Saudi Aramco and RIL have a long-standing crude oil supply relationship of over 25 years. To date it has supplied approximately 2 billion barrels of crude oil for processing at RIL’s refinery at Jamnagar. The proposed investment would result in Saudi Aramco supplying 500 KBPD of Arabian crude oil to the Jamnagar refinery on a long-term basis. Source: Reliance, 8/12/2019. TCGR Note: A 20% in RIL Oil to Chemicals (O2C) division with an enterprise value of $75 BIL is a major shift in global oil supply and downstream commitment between Aramco and RIL. This has strategic consequences other CAP members should note. For more information in this area, see TCGR’s “Oil-to-Chemicals II: New Approaches from Resid and VGOs”.