(Bloomberg) -- Saudi Aramco (SE:2222) said it’s still working on a deal to buy a $15 billion stake in Reliance Industries Ltd.’s refining and chemicals business, even as lower oil prices forces it to slash investment spending.
Reliance’s shares fell in mid-July after Chairman Mukesh Ambani said a transaction had been delayed “due to unforeseen circumstances in the energy market and the Covid-19 situation.”
A deal with Reliance would help the world’s biggest crude exporter join the ranks of the top oil refiners and chemical makers. State-owned Aramco is already a major supplier of crude to India, while Reliance sells petroleum products, including gasoline, to the kingdom.
“We are still in discussion 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 on Sunday that second-quarter net income was down almost 75% from a year earlier. It has been slammed by the roughly 33% drop in oil prices in 2020. The coronavirus pandemic halted travel and business, slashing demand for crude and fuel.
Ambani, the world’s fourth-richest person, said last year that Aramco was set to buy a 20% stake in his company’s refining and petrochemicals business, valuing it at $75 billion.
The Reliance transaction would help Aramco reach its goal of more than doubling refining capacity to between 8 million and 10 million barrels a day. The Saudi firm had refining capacity of 3.6 million barrels a day at the end of last year, including wholly-owned plants and stakes in joint ventures. The gross capacity of facilities in which Aramco has stakes was 6.4 million barrels daily.
The company, officially known as Saudi Arabian Oil Co., is working to start the 400,000 barrel-a-day Jazan refinery on Saudi Arabia’s southern Red Sea coast this year. It also owns the biggest refinery in the U.S. as well as plants in countries such as South Korea and Japan. It’s planning several Chinese ventures.
Reliance’s need for a cash infusion has eased in recent months. The Indian conglomerate raised some $30 billion by attracting investments from the likes of Google (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB). into its digital unit, Jio Platforms Ltd., and by selling shares to existing stakeholders.
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