Saudi Aramco’s growing oil wealth to accelerate Reliance O2C’s business


Bank of America analysts said Aramco will offer more than the promised $ 75 billion as a dividend this year. Aramco is now preparing for a second public offering of shares

Rising crude oil prices and the resulting growth in the cash flow of Saudi Aramco, the world’s largest oil company, will accelerate its business with Reliance O2C Ltd, sources who know say. As the price of Brent oil is close to $ 70 per barrel – it was $ 38 in early November – the Bank of America (BoA) estimates that Aramco will generate close to $ 100 billion in cash flow in 2022.

Mukesh Ambani, president and CEO, Reliance Industries, announced in 2019 that Aramco would take a 20 percent stake in the newly acquired subsidiary Reliance O2C for $ 15 billion. But Aramco’s muted public share issue and falling oil prices in April last year forced companies to postpone the deal.

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“Aramco views Reliance O2C as a dedicated buyer of its crude oil. When uncertainties take over the oil world, building relationships in one of the largest oil-consuming countries will strengthen its position for the future,” the CEO said.

BoA analysts said that Aramco will offer more than the promised 75 billion dollars as a dividend this year. Aramco is now preparing for a second public offering of shares.

However, there is dissatisfaction in India against OPEC + countries, which have decided to continue cutting production to keep oil prices at higher levels. Last week, the OPEC + group surprised the market with a decision not to discontinue collective crude oil production from April.

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RIL’s O2C business includes dual refineries in Gujarat’s Jamnagar and an adjacent petroleum chemicals complex, in addition to RIL-BP Plc’s oil joint venture.

The agreement also provides a special market for Aramco crude oil in India. As part of the deal, O2C will sign the purchase of 500,000 barrels of crude oil each day (28 percent of Jamnagar Refinery’s needs) on a long-term basis from Aramac. In addition, the O2C deal will be a proposal to create value for both giants, as it focuses on directing 70 percent of refined crude oil to produce high-value chemical products.

ALSO READ: RIL announces the separation of the petrochemical trade while negotiations with Aramc continue


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