Saudi Aramco Deal Not Progressed As Plan Due To COVID-19, Says Mukesh Ambani

Reliance Industries' shares declined 5% after Mr Ambani's announcement

Saudi Aramco Deal Not Progressed As Plan Due To COVID-19, Says Mukesh Ambani

Reliance Industries' stock declined 5% over the announcement

Reliance Industries Limited (RIL) Chairman Mukesh Ambani on Wednesday said the deal with Saudi Aramco has not progressed according to the scheduled time due to ongoing pandemic situation. "Deal with Saudi Aramco hasn't progressed per original timeline due to unforeseen situation in the energy market and COVID-19 situation. We value our two-decade relationship with Aramco and are committed to long term partnership," Mr Ambani said while speaking at the 43rd Annual General Meeting (AGM) of the company.

Meanwhile, the Reliance stock reacted negatively to the delay in the deal. Soon after Mr Ambani's announcement, the stock witnessed a sharp decline of 5 per cent towards the end of trading hours. However, at closing, it had pared some of the losses and finished trading with the shares priced at Rs 1,845.60 apiece, down 3.71 per cent.

The RIL Chairman said the KG-D6 basin can be restarted towards the end of the year to provide India with natural gas, which is one of the cleanest fossil fuels.

The company is also looking to spin off its Oil-to-Chemicals (O2C) business into a separate subsidiary to facilitate multiple partnership opportunities. "We have approached the NCLT with our proposal to spin off our O2C business into a separate subsidiary to facilitate multiple partnership opportunities. We expect to complete this process by early 2021," Mr Ambani said.

He said that the company's O2C business has outperformed the sector amid the ongoing COVID-19 pandemic and delivered an Earnings before interest, taxes, depreciation, and amortization (EBITDA) of Rs 55,394 crore.

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This comes as the global refining and petrochemicals industry faced a major challenge as businesses and consumer activities came to a halt leading to unprecedented demand destruction and dislocation of margins amid the lockdown.

Claiming to reimagine the entire energy platform, Ambani said that it is imperative that the energy industry adopts a clean, circular, sustainable and planet-friendly model that delivers green and affordable energy to all the 7.8 billion people on the planet.

"Reliance is committed to embracing new technologies to convert CO2 into useful products and chemicals. Transforming our energy business to tackle a big challenge before India and the World is our new growth opportunity," he said.