Reliance to Separate Oil-to-Chemicals Business Amid Aramco Talks

(Bloomberg) -- Reliance Industries Ltd. announced plans to carve out it oil and petrochemicals business into a separate entity before a proposed stake sale to Saudi Arabian Oil Co., the kingdom’s main oil producer.

Reliance will approach the National Company Law Tribunal to hive off the oil-to-chemicals division, it said in a statement Thursday. The separation may help expedite the deal with Saudi Aramco, once talks and due diligence conclude.

“In spite of the Covid-19 crisis and the lockdowns, the due diligence by Saudi Aramco for the planned investment in the O2C business is on track as both the parties are committed and actively engaged,” Reliance said in the statement.

The deal is crucial for Asia’s richest man Mukesh Ambani to make Reliance debt-free by March 2021. Reliance in August valued its oil-to-chemicals division, which comprises of refining, petrochemicals and fuel marketing, at $75 billion including debt, implying a $15 billion valuation for the proposed 20% stake. The company operates the world’s biggest refining complex in western India’s Gujarat state that can process 1.36 million barrels of oil every day.

Reliance and Aramco have been trying to overcome differences over the deal’s structure, which had stalled the process last year, Bloomberg News previously reported. The Indian company is keen to sign a binding agreement before its annual shareholders’ meeting, due before the end of September.

In April, Reliance said it would raise as much as 250 billion rupees ($3.3 billion) through non-convertible debentures and last week unveiled a $5.7 billion investment by Facebook Inc. in its digital platform business. On Thursday, the company said it plans to raise as much as $7 billion by selling shares to existing investors for the first time in about 30 years as the energy-to-technology conglomerate steps up efforts to pare its $44 billion of debt.

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