A possible Saudi Aramco appointment on Reliance board triggers buzz over $15 billion deal

Saudi Aramco chairman and Yasir Al-Rumayyan, may be inducted on the board of Reliance Industries Ltd. An announcement of Al-Rumayyan’s induction on the RIL board may come as early. The board of the newly carved oil-to-chemical (O2C) unit may come as early as at the company’s annual shareholder meeting on June 24.

“Over the last year, new investors have joined RIL’s digital and retail business at subsidiary level and RIL has formed new partnerships with global players like Google, Facebook, Microsoft, Qualcomm etc. Investors now expect RIL to give direction to these businesses and announce groundbreaking products,” it said, adding reports suggest that it will likely announce a new smartphone partnered with Google and its pricing.

“There is also expectation of some update on Saudi Aramco deal and speculation that the Chairman of Saudi Aramco may join RIL’s board,” it said.

Both RIL and Saudi Aramco did not reply to emails sent for comments. An email sent to PIF too remained unanswered. PIF has already picked up a minority stake in Reliance Retail and Jio.

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Deal to conclude by March 2020

In a separate report, BofA Securities said RIL’s AGM each year has turned into a key event where chairman Mukesh Ambani provides more information on the outlook of key business divisions.

“Historically we have seen major announcements on phones, tariffs, stake-sales etc,” it said. The deal to sell stake in O2C business to Aramco too was announced at RIL AGM in 2019.

Besides refineries and petrochemical plants, the O2C business also comprises a 51 per cent stake in the fuel retailing business. It, however, does not include the upstream oil and gas producing assets such as the flagging KG-D6 block in the Bay of Bengal.

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RIL had in 2019 put USD 75 billion as the value of O2C business after signing a non-binding letter of intent with Saudi Aramco.

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 material plans.

Aramco buying 20 per cent in O2C business would allow Reliance to build financial muscle as it carves out space for itself in highly competitive omnichannel retail.

RIL refineries are one of the most complex in the world, allowing it to earn a significant premium to the benchmark Singapore gross refining margin. Its petrochemical complexes rank amid the biggest in the world, whose dependency on outside raw materials is minimal. It has leadership positions both in the domestic polymer and polyester markets.

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