INSUBCONTINENT EXCLUSIVE:
Reliance had in August 2019 put a $75 billion valuation for the O2C businessAfter missing two self-imposed deadlines, billionaire Mukesh
Ambani's Reliance Industries Ltd has shelved a proposed deal to sell a 20 per cent stake in its oil refinery and petrochemical business to
Saudi Aramco for an asking of $15 billion as the Indian firm focuses on new energy business."Due to evolving nature of Reliance's business
portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed
investment in O2C business in light of the changed context," the Indian firm said late Friday, adding that it will continue to be Saudi
Aramco's "preferred partner" for investments in India's private sector.Ambani had in company's annual general meeting of shareholders
in August 2019 announced talks to sell a 20 per cent in the oil-to-chemicals (O2C) business, which comprises its twin oil refineries at
Jamnagar in Gujarat, petrochemical assets and 51 per cent stake in fuel retailing joint venture with BP, to the world's largest oil
exporter.At that time, he had announced the deal would close by March 2020
The deadline was missed and the company blamed pandemic controlling restrictions, imposed towards the end of March 2020, for hampering due
diligence.This year too, at the AGM, Ambani stated that the deal would close by the end of the year
At the same event, he also announced new energy forays including a plan for developing one of the largest integrated renewable energy
manufacturing facilities in the world.The complex would consist of a solar photovoltaic module, battery, green hydrogen and fuel cell
factories and cost Rs 60,000 crore
While new deadlines for Aramco deal and new energy forays were announced in the same breath, it wasn't clear what changed between June and
now to site shifting focus for the "re-evaluation."Reliance also decided to withdraw the proposal filed before the National Company Law
Tribunal (NCLT) to separate O2C business from the company
New energy businesses are housed in separate subsidiaries of RIL and are not part of O2C
How the new energy business housed in separate subsidiaries impacted negotiations for O2C stake wasn't clear
It also wasn't clear why the separation proposal filed before NCLT was withdrawn if Aramco remained interested in buying a stake in the O2C
business and the deal could be concluded in future.It also wasn't known if Aramco was interested in the new energy business as well and so a
reworked deal needed to be negotiated
An email sent to the company spokesperson on these issues remained unanswered.Reliance in the Friday night statement said it and Saudi
Aramco spent two years performing due diligence before reaching a decision to reassess
It said it will work with Aramco and SABIC for investments in the Kingdom."The deep engagement over the last two years has given both
Reliance and Saudi Aramco a greater understanding of each other, providing a platform for broader areas of cooperation," the statement
Aramco dragged on even after the global pandemic broke out amid speculation that Aramco had started to baulk at the price even as it
reviewed its investment strategy in India
sharply after the COVID-19 pandemic broke out and this had cast a cloud on the deal
But hopes were re-ignited in the middle of this year when reports suggested that the two sides had resumed discussions.With oil prices
Aramco chairman Yasir al-Rumayyan was appointed as an independent director on the RIL board.O2C does not include the upstream oil and gas
producing assets such as the KG-D6 block in the Bay of Bengal
A stake in Reliance's O2C business would have given Aramco an entry into one of the world's fastest-growing fuel markets
It would also have given it a ready-made market for 5 lakh barrels per day of its Arabian crude and offer a potentially bigger downstream
role in the future.Aramco has an equity stake in China's largest O2C project at Zhejiang with a long-term crude supply agreement and a
plan to build a network of retail outlets
It also has a fuel retailing joint venture with Sinopec operating 1,000 retail outlets.An investment in Reliance's O2C subsidiary could
have given Aramco a similar footprint - a stake in India's largest O2C project with a long-term crude supply agreement and participation
in fuel retailing via the Reliance-BP joint venture.Over the past years, the oil-to-telecom conglomerate has segregated businesses into
separate verticals - Jio Platforms houses the company's digital and telecom unit, retail is a separate unit and oil refining and
petrochemical segments have been carved into the O2C sector to attract strategic partnerships.The firm had recently announced carving out
the O2C business as a separate subsidiary to support strategic partnerships and new investors in order to accelerate its new energy and
