Reliance has developed an oil-to-chemical strategy for transforming the Jamnagar refinery from a fuel producer into chemicals. Chairperson and managing director of Reliance Industries, Mukesh Ambani, announced on Monday an agreement with Saudi Aramco, describing it as the largest foreign direct investment in India to date. As part of the deal, Saudi Aramco will acquire a 20% stake in RIL's oil-to-chemicals (OTC) at $75 billion enterprise value for the refining and petrochemicals business.
At the company's 42nd AGM in Mumbai, Ambani addressed shareholders. He said the Saudi Aramco deal, subject to regulatory clearance, will take place at an enterprise value of $75 billion. Saudi Aramco, officially the Saudi Arabian Oil Company, based in Dhahran, Saudi Arabia, is a Saudi Arabian national petroleum and gas company.
It is one of the world's largest revenue companies and is said to be the world's most profitable company. The refining complex of Jamnagar has a capability of 1.4 million barrels per day (bpd). Based on plans shared with the Indian government, it plans to expand capacity to 2 million bpd by 2030. "The goals are to preserve and upgrade existing refinery margins while maximizing the utilisation of assets for sustainable competitive chemicals costs," RIL said in its annual report for 2018-19. The company ultimately wants to achieve a 70 percent conversion of crude refined to competitive chemical building blocks of olefins and aromatics in Jamnagar. At the culmination of the oil-to-chemical shift, the Jamnagar refinery product sheet shall be merely jet fuels and petrochemicals.
Under the deal, Saudi Aramco will also provide RIL's Jamnagar Refinery with 5,00,000 barrels of crude oil per day on a long-term basis, he said. This comes as a major announcement days after RIL had said it has entered into a joint venture with the British petroleum major BP for the former's petroleum retail business, with BP having 49 per cent stake in the venture. "All refined products priced below crude are eliminated at the initial stage for chemicals. The final de-risk of fuel is targeted at the elimination of gasoline, alkylate and diesel, synchronized with the global evolution of the decline in the demand for e-mobility and transportation fuel," said RIL in its annual report.
With IANS inputs