The talks between India’s Reliance Industries (RIL) and Saudi Aramco to form an oil-to-chemicals (OTC) joint venture appear to be stalling over price, Reuters reported citing four sources familiar with the matter. Under the deal, Aramco is set to acquire a 20% stake in RIL’s OTC business for $15 billion. Both companies initially expected to finalize the deal by March 2020.
However, the COVID-19 pandemic hit the energy market and painted a gloomy outlook in the refining industry. As a result, Aramco wants the Indian company to review the valuation they agreed before the health crisis, one of the sources said. Another source said Aramco did not have the money, while RIL avoided settling for a reevaluated valuation and instead preferred to wait for the market to recover.
RIL Chairman Mukesh Ambani said last month that talks with Aramco are progressing. However, he said on Wednesday that the COVID-19 pandemic created unexpected circumstances in the energy market and delayed the discussions. He also noted that RIL remained committed to long-term partnerships with the Middle Eastern oil giant.
RIL’s OTC business generated an EBITDA of INR 553.9 billion ($7.4 billion) in the fiscal year ended March 31, despite the challenging market environment for global refining and petrochemical businesses. During the period, RIL’s manufacturing facilities operated at more than 90% of capacity, Ambani said.
