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Reliance, Aramco agree to re-evaluate $15bn O2C investment proposal

Reliance, Aramco agree to re-evaluate $15bn O2C investment proposal

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NEW DELHI: Reliance Industries, India’s largest private petrochemicals company controlled by billionaire Mukesh Ambani, and Saudi Aramco agreed to re-evaluate a previous non-binding agreement to sell a 20 per cent stake in the Indian company’s oil-to-chemicals (O2C) business as it shifts strategy to focus on renewable energy.

“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,” Reliance said in a statement, report agencies.

India’s largest private sector company said it had also withdrawn its application with the country’s National Company Law Tribunal to segregate its O2C business. This was intended as part of the potential 20 per cent stake sale to Saudi Aramco.

At Reliance’s annual general meeting in June, Mr Ambani unveiled an ambitious push into clean energy that earmarks 750 billion rupees ($10.1bn) of investment over three years to help transform the company, which still gets nearly 60 per cent of its revenue from fossil-fuel related businesses.

“The world is entering a new energy era, which is going to be highly disruptive,” said Mr Ambani, 64. “The age of fossil fuels, which powered economic growth globally for nearly three centuries, cannot continue much longer. The huge quantities of carbon it has emitted into the environment have endangered life on Earth.” “Our world has only one option, rapid transition to a new era of green, clean and renewable energy,” Mr Ambani said.

“I envision a future when our country will be transformed from a large importer of fossil energy to a large exporter of clean solar energy solutions.” Reliance has a 15-year strategy to become net-carbon zero by 2035.

Reliance and Aramco “over the past two years ... made significant efforts in the process of due diligence, despite Covid-19 restrictions”, Reliance said. “The deep engagement over the past two years has given both Reliance and Saudi Aramco a greater understanding of each other, providing a platform for broader areas of cooperation. Saudi Aramco and Reliance are deeply committed to creating a win-win partnership and will make future disclosures as appropriate.” RIL said it would continue to be Saudi Aramco’s preferred partner for investments in India’s private sector and will collaborate with Saudi Aramco and SABIC for investments in Saudi Arabia.

Reliance Industries and Saudi Aramco had signed a non-binding letter of intent in August 2019 for a potential 20 per cent stake acquisition by the world’s biggest crude exporter in the O2C business of Reliance for an enterprise value of $75 billion.