Saudi Aramco plans to buy a stake in the refining and chemicals business of India’s Reliance Industries Ltd., moving to diversify from Saudi Arabia.
The purchase by Aramco, the largest oil exporter and the most profitable company in the world, precedes a planned public offering that could be held as early as next year.
Aramco will buy a 20% stake in the company’s oil-to-chemicals business, including the 1.24 million-barrel-a-day Jamnagar refining complex on India’s west coast, Reliance Chairman Mukesh Ambani said. Reliance values its oil-to-chemicals division at $75 billion including debt, implying a $15 billion valuation for the stake.
The deal will allow Aramco, officially known as Saudi Arabian Oil Co., to expand its chemicals business as it seeks to reduce reliance on sales of crude. For Reliance, the cash from Aramco will help reduce debt that’s been pushed up by a headlong expansion into new sectors such as telecommunications.
“In downstream we will further profitably diversify our operations and increase petrochemicals production,” Khalid Al-Dabbagh, senior vice president for finance, strategy and development, said in an interview. The details of the agreement with Reliance remain in the “early stages,” he said.