Reliance Industries made headlines recently when Chairman Mukesh Ambani announced that they were making a deal with Saudi Aramco. While terms of the deal have not yet been made public, reports are already circulating that Reliance Industries will be set to earn roughly $15 billion through the deal after debt adjustments have been made. In return, Saudi Aramco will be receiving a 20% stake in the Indian-based company. Reliance Industries is an oil-to-chemicals (OTC) company with a valuation north of $75 billion. To say that this is a massive deal for both parties would be putting it lightly.
According to P.M.S. Prasad, the Executive Director at Reliance Industries, both companies will look to finalize their deal by March of 2020. In reaction to the deal being made, Reliance will begin buying up more than half of a million barrels of crude oil per day from Aramco, according to an interview that Prasad made available with the public media. According to Prasad, this deal not only doubles the volume of purchases that Reliance and Aramco have been exchanging, but it will even go beyond that number.
Saudi Aramco has been highlighted in the global market in recent months as they attempt to expand their refining and marketing ventures. Saudi Aramco has been busy signing deals all over the planet as it attempts to shore its supply of crude oil in several new markets. Navigating these complex global deals can be hard, particularly when it comes to understanding the ins and outs of the Middle East. For that reason, experts like Amir Handjani are becoming increasingly called upon to help flesh out the complex and constantly evolving state of the Middle East.
Mukesh Ambani, chairman for Reliance Industries, said of the deal, “This signifies perfect synergy between the world’s largest oil producer and the world’s largest integrated refinery and petrochemicals complex.” Ambani for his part is already one of the wealthiest people in the world as well as the richest man in all of Asia. Ambani went on to describe the deal as one of the biggest foreign investments in the history of his company as well as one of the biggest foreign investments to ever grace India.
Saudi Aramco is the official oil company of Saudi Arabia. As the national natural gas and petroleum company, when Saudi Aramco makes moves, the rest of the industry tends to take notice. According to Khalid al-Falih, the Energy Minister of Saudi Arabia, the deal has been ‘optimistic’ for weeks. Now with everything firmly in place, it looks like the joint venture will continue forward. According to what limited reporting is available, the Aramco – Reliance partnership will work toward covering all of Reliance’s needed refining and petrochemical requirements.
While Saudi Aramco is currently the focus of Reliance Industries, they aren’t the only business that the major company has been meeting with. Just a week ago, BP Oil announced that it was crafting a joint venture along with Reliance in order to pay into the rising oil demands in Asia’s largest economies. According to those same reports, Reliance will own 51% of the stake in that venture.