Reliance Industries' proposition to sell Saudi Aramco a 20 percent stake in its oil-to-chemicals business has been stalled, dragging down the shares of the Indian group on the day that its chairman disclosed a $4.5 billion agreement with search giant Google.
Without explicitly saying that the deal was in peril or has been totally scrapped, Reliance Chairman Mukesh Ambani, during the 43rd virtual annual general meeting, laid down enough hints at the way the agreement would be headed.
On Wednesday, Ambani told stakeholders that the deal will have to take a backseat as per the initial timeline as a result of unforeseen circumstances in the energy sector and the ongoing global health crisis.
However, the billionaire said that they, at Reliance, "value our over two-decade-long relationship with Saudi Aramco and are committed to a long-term partnership," Debjit Chakraborty and Saket Sundria quoted Ambani as saying in their Bloomberg story.
Reliance, the operator of the largest refining facility in the world, announced in 2019 a $15 billion contract with the world's leading oil producer Aramco as part of the Indian conglomerate's efforts to slash its debts. The Aramco deal was initially estimated to be finalized by March this year.
Shares of Reliance dropped over 6 percent after Ambani's comment on the Aramco contract. The shares settled down 3.9 percent at 1,844 rupees apiece.
Sources with knowledge of the negotiations disclosed Saudi Aramco was not comfortable at the outset of the $15 billion price tag Reliance had imposed on the 20 percent stake in the O2C venture, which comprises the group's twin refining plants in Jamnagar, Gujarat, petrochemical facilities and 51 percent in the fuel retail operations.
Ambani stated that Reliance has been approached by global investors for strategic ventures in its petrochemical business, including in utilizing feedstocks. Ambani did not name the companies.
Meanwhile, with prices of crude oil plummeting due to COVID-19, it pursued a full re-assessment, placing a price tag for the business of no more than $57-60 billion ($11-12 billion for 20 percent stake), sources divulged.
For Ambani's group, the exigency to seal the Aramco contract has somewhat toned down after it generated nearly $30 billion in recent months through major investments in its digital platform and by selling stocks to existing stakeholders.
Ambani has announced his flagship net debt-free without total dependence on Aramco, and on Wednesday Asia's wealthiest person disclosed that he anticipates fresh investors for his retail and petrochemical ventures.
