Largest possible FDI
In what could be the largest foreign direct investment in India, Saudi Aramco has proposed to sign a non-binding Letter of Intent (LOI) to acquire a 20 per cent stake in the oil to chemicals (O2C) division — comprising the refining, petrochemicals and fuels marketing businesses — of Reliance Industries Ltd (RIL).
Saudi Aramco’s potential 20 per cent stake which is based on an enterprise value of $75 billion for the O2C division of RIL is worth around $ 15 billion, or Rs 1,06,000 crore.
What would the deal include?
The deal with Aramco will include of Reliance’s refining and petrochemicals assets as well as the remainder of stake the firm has in fuel retailing business after selling 49 per cent to BP of Britain.”
Will reduce RIL debt
Aramco’s proposed investment of over Rs 1 lakh crore could turn out to be a big booster shot for the sagging investment scenario in the country. For RIL, the second most valued listed company, it will help in reducing the debt burden. The largest oil producer’s interest is a strong endorsement of the quality of assets and operations as well as of the potential of India.
The company had last week announced that BP is acquiring 49 per cent stake in its fuel retailing business. Reliance will get Rs 7,000 crore from BP for this transaction.
About Aramco Company
Saudi Aramco is 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. 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.
RIL’s Jamnagar refinery is the largest refinery in the world. After TCS, RIL is the second most valued company in India with a market capitalisation of over Rs 736,000 crore.