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Updated August 10th, 2020 at 12:22 IST

Saudi Aramco still working on $15 billion Reliance investment; half-year profits tank

Saudi Aramco on Sunday said it’s still working on a deal to buy a $15 billion stake in Reliance Industries Ltd’s (RIL) oil-to-chemicals business,as per reports

Reported by: Brigitte Fernandes
Aramco
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Saudi Arabian Oil behemoth Saudi Aramco on Sunday said it’s still working on a deal to buy a $15 billion stake in Reliance Industries Ltd’s (RIL) oil-to-chemicals business, according to a media report. The chief executive officer of the world’s largest crude oil producer Amin Nasser said they are still in a discussion with Reliance about the deal.

“The work is still on. We will update our shareholders in due course about the Reliance deal" Amin Nasser said on a call with reporters on Sunday.

READ | Mukesh Ambani drops from 6th to 9th in Billionaires list post delay in Aramco deal

Delay in the Aramco deal

Reliance had declared plans to sell a 20 percent stake in its oil-to-chemicals (O2C) business to Saudi Aramco as part of its deleveraging exercise last fiscal year. However, this year in July, RIL's chairman and Managing Director Mukesh Ambani said that due to unforeseen circumstances in the energy market and the Covid-19 situation the deal has not progressed as per the original schedule.

While addressing the shareholders at Reliance Industries' 43rd AGM, Ambani said that  "Deal with Saudi Aramco hasn't progressed per original timeline due to unforeseen situation in the energy market and COVID-19 situation. We value our two-decade relationship with Aramco and are committed to long term partnership."

The deal with Reliance would help the world’s biggest crude exporter to join the ranks of the top oil refiners and chemical makers. Aramco is already a major supplier of crude to India, while Reliance sells petroleum products, including gasoline, to Saudi.

READ | Saudi Aramco Q1 profits of $16B as virus impacts earnings

Aramco's Half-year Profits Plunge 

On Sunday Aramco reported that second-quarter net income was down almost by 75 percent from a year earlier. It has been hit by the roughly 33 percent drop in oil prices in 2020 due to the coronavirus pandemic. The virus spread had also halted travel and business, cutting demand for crude and fuel.

"Profits for the first six months of the year plunged to $23.2 billion, half of last year’s $46.9 billion for the same time period", an official release from Aramco said.

READ | Saudi Aramco half-year profits plunge 50% from virus impact

Aramco aims doubling refining capacity

Meanwhile, the Reliance deal would help Aramco reach its goal of more than doubling refining capacity to between 8 million and 10 million barrels a day. The Saudi oil firm had a refining capacity of 3.6 million barrels a day at the end of last year, including wholly-owned plants and stakes in joint ventures. The gross capacity of facilities in which Aramco has stakes was 6.4 million barrels daily. Furthermore, the company is working to start the 400,000 barrel-a-day Jazan refinery on Saudi Arabia’s southern Red Sea coast this year. 

READ | 15-year plan to convert Reliance into new energy company

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Published August 10th, 2020 at 12:22 IST

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