In another big investment meant to diversify its operations, Saudi state oil company Saudi Aramco has signed a letter of intent to buy a 20% stake in India’s Reliance Industries’ petrochemical and refining business for about $15 billion.
Reliance’s petrochemical business had just over $25 billion in sales during its most recent fiscal year, making it the 11th-largest chemical company in the world, behind South Korea’s LG Chem, according to C&EN’s survey of the Global Top 50 chemical companies.
The refining and marketing business had sales of nearly $58 billion. It operates the world’s largest refinery, in Jamnagar, India.
Reliance and Aramco have a long standing relationship: Aramco has already provided 2 billion barrels of oil to the complex. With this new deal, Aramco will supply 500,000 barrels of crude to the Jamnagar refinery per day.
“Saudi Aramco’s interest is a strong endorsement of the quality of our assets and operations as well as of the potential of India,” said Reliance chair Mukesh Ambani in a statement.
Seeing a future of ebbing global demand for fuels, Aramco has gone on a massive spending spree on foreign and domestic chemical assets. Earlier this year, it signed an agreement to buy a 70% stake in Saudi petrochemical maker Sabic, the fourth largest chemical maker in the world. Aramco has also pledged to spend $100 billion on petrochemical projects.
“Saudi Aramco continues to show keen interest in accessing the Indian market, which has the strongest long-term growth prospects,” says Alan Gelder, vice president refining and chemicals for the consulting firm Wood Mackenzie. “Aramco is also demonstrating discipline in targeting strongly competitive assets that are well placed, through petrochemical integration, to be sustainable through the energy transition.”