India’s Reliance Group to Miss Planned Date to Close Saudi Aramco Deal

DESPARDES — Indian business conglomerate Reliance Industries’ proposed deal to sell a 20 percent stake in its oil to chemicals business to Saudi Aramco for an estimated $15 billion will miss the planned March 31 timeline, a senior company executive has said.

The deal was announced by Reliance (RIL) chairman and managing director Mukesh Ambani at the company annual general meeting in August last year and was intended to reduce its massive debt and ensure assured supply of crude oil to its refineries.

“It will not be a deal which will get done by March,” RIL’s joint chief financial officer V Srikanth told reporters on the occasion of its quarterly results announcement. “The deal is making very good progress, but it’s a large transaction/large cross-border deal which is complex. I cannot comment on the timeline,” he said.

“Definitive agreements are something we are trying to do,” the RIL executive added.

Oil industry analysts said the delay in reaching a binding agreement between Saudi Aramco and RIL could be because of the complex nature of the latter’s oil business assets and their contractual obligations and the on-going legal disputes with the Indian government regarding this. RIL is currently engaged in a legal tussle with India’s federal petroleum ministry over enforcement of an estimated $4.5billion in an international arbitration award of the Panna-Mutka and Tapti (PMT) oil field production-sharing contracts case.

The Delhi High Court recently ordered RIL and BG Exploration and Production India Ltd – a unit of Shell India, which is also part of the PMT joint venture – to disclose their assets after the government sought to restrain them from disposing of the same.

“The contractual obligations and the on-going legal disputes between RIL and the Indian government will have a significant bearing on the former’s proposed equity sale deal with Saudi Aramco,” Tsunduru Muralidhar, oil industry expert, and an independent industry consultant, told Arabian Business.

“Saudi Aramco will have to study the implications of these legal issues regarding the oil business assets of RIL and also their likely outcomes and costs before arriving at a decision on the stake acquisition,” Muralidhar said.

“It’s an unknown territory Saudi Aramco has to navigate. It will have to take a calibrated call on this, he added.

“We expect to complete these transactions within this financial year (FY20) subject to due diligence, definitive agreements, and regulatory and other customary approvals,” Mukesh Ambani had said, while announcing the deal in August 2019.

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