The largest oil production company Saudi Aramco plans to buy stocks of the Reliance Industries Holding, which owns the richest man India Mukesh Ambani, writes Bloomberg with reference to its sources. Reliance is also engaged in oil and gas production and oil refining.
Saudi Aramco intends to enter Reliance through the acquisition of 20 percent of shares in the amount of 20-25 billion dollars. The deal will be closed in the coming weeks, although negotiations last more than two years – the pandemic affected the delay and the fall in oil prices. Sources of publication reported that the details of the Agreement are still discussed and the conclusion of the contract may delay. In case of success, the Saudi oil transfer will make the first purchase of shares from the moment of entering the IPO in December 2019. Against the background of the news, Reliance stock increased by 2.6 percent, but then they fell a little and at the time of writing the notes were trading at 2,173 Indian rupees (29.3 dollars) per piece (plus 1.3 percent).
Agreement will further strengthen the relationship between Saudi Arabia and India. In 2019, the countries have created a Council of Strategic Partnership for further strengthening cooperation. In August 2020, Er-Riyad stopped issuing a loan to Pakistan, thereby supporting India in the territorial dispute over Kashmir.
From a financial point of view, the transaction is beneficial to both parties. For Saudi Aramco, it means an increase in oil exports to India and the perspective to achieve the goal for daily oil processing from 3.6 million barrels to 10 million. In July, Saudi Arabia supplied 613 thousand barrels of oil per day to India – 10 percent of all exports.
In the second quarter of 2021, the Saudi Aramco profit increased by almost 300 percent – four times more than a year ago – up to 25.5 billion dollars. The takeoff occur due to an increase in the cost of oil, weakened coronavirus restrictions, vaccination and return of economic activity.