The Saudi Arabian Oil Co. (Saudi Aramco), the world’s largest crude oil producer, said it’s still working on a deal to buy a $15 billion stake in Reliance Industries Ltd’s (RIL) oil-to-chemicals business, Bloomberg reported.
“We are still in discussions with Reliance,” Aramco chief executive officer Amin Nasser said on a call with reporters on Sunday. “The work is still on. We will update our shareholders in due course about the Reliance deal.”
Aramco reported a 50% drop in net income for the six months ended 30 June.
RIL had announced plans to sell a 20% stake in its oil-to-chemicals (O2C) business to Saudi Aramco as part of its deleveraging exercise last fiscal. This July, however, RIL’s chairman and managing director Mukesh Ambani said due to unforeseen circumstances in the energy market, the deal has not progressed as per the original timeline.
“Nevertheless, we at Reliance value our over two-decade-long relationship with Saudi Aramco and are committed to a long-term partnership. We will approach the NCLT (National Company Law Tribunal) with our proposal to spin off our O2C business into a separate subsidiary to facilitate this partnership opportunity. We expect to complete this process by early 2021,” Ambani said at the company’s annual general meeting on 15 July.
In a press statement published on Sunday, Saudi Aramco said its net income plunged to $23.2 billion in the first half of 2020, down by half from $46.9 billion over the same period in 2019.
Aramco reported a 73.4% fall in second-quarter net profit and said it expected capital expenditure for 2020 to be at the lower end of a $25 billion to $30 billion range.
“Strong headwinds from reduced demand and lower oil prices are reflected in our second-quarter results,” Nasser said.
The covid-19 pandemic has resulted in substantial reductions in consumer and business activity and significantly reduced demand for crude oil, natural gas and petroleum products. It has thus delayed the oil major’s deal with RIL.
The RIL board had this April approved a scheme of arrangement for transfer of O2C undertaking of the company to Reliance O2C Ltd.
The O2C undertaking of the company comprises of refining, petrochemicals, fuel retail and aviation fuel, and bulk wholesale marketing businesses together with its assets and liabilities.
RIL has also laid out a 15-year vision for itself to build a new energy company whose focus will be to recycle carbon dioxide, create value from plastic, and build clean and affordable energy with hydrogen, wind, solar, fuel cells and battery.
Ambani, in his address on 15 July, said that RIL aims to become net carbon zero by 2035.
While RIL will remain a user of crude oil and natural gas, it is committed to embracing new technologies to convert its carbon dioxide emissions into useful products and chemicals, he said.
