NEW DELHI — Oil giant Saudi Aramco is set to buy 20% of Indian conglomerate Reliance Industries’ oil and chemicals business for about $15 billion, in a deal that gives it further heft and diversity ahead of a long-awaited IPO.
For India, the preliminary agreement amounts to one of the country’s largest foreign direct investments.
Reliance Chairman Mukesh Ambani on Monday told an annual meeting of shareholders that Aramco will also supply Reliance’s Jamnagar refineries with 700,000 barrels of oil a day on a long-term basis. The refining complex has a capacity to process 1.4 million barrels per day.
“This is the biggest foreign investment in the history of Reliance,” he said. “It is also amongst the largest foreign investments ever in India.”
The deal includes refining and petrochemicals, helping to diversify the business operations of Aramco, which has been traditionally focused on pumping oil out of the Middle East.
The state of Aramco’s operations and finances, which has been secret for most of the company’s recent history, is under intense scrutiny as investors prepare for the IPO. The company has started reporting earnings and raised money in a bond offering, giving a glimpse into its business.
Among some analysts’ concerns is that it might be too exposed to the business of pumping oil or to the political climate in Saudi Arabia, where King Salman and his son, Crown Prince Mohammed bin Salman, who have taken a much more active role in controlling power centers.