Mukesh Ambani told shareholders on Wednesday a deal had been delayed due to 'unforeseen circumstances in the energy market and the COVID-19 situation'
NEW DELHI: Talks about selling a 20% stake in Reliance Industries Ltd's oil-to-chemical business to Saudi Aramco have stalled over the valuation, four sources familiar with the matter said, as the energy market has been hit by COVID-19.
Aramco wants India's Reliance to review its price for the oil-to-chemical business as the global valuation of oil assets has tumbled due to falling demand for crude, one source said.
A second source said Aramco wanted to "revisit" the valuation.
Reliance Chairman Mukesh Ambani told shareholders on Wednesday a deal had been delayed due to "unforeseen circumstances in the energy market and the COVID-19 situation".
Reliance, operator of the world's biggest refining complex, last year announced a $15 billion deal with the world's top oil exporter Aramco as part of the Indian company's efforts to cut its debts.
"Due to unforeseen circumstances in the energy market and the Covid-19 situation, the deal (with Saudi Aramco) has not progressed as per the original timeline," Mukesh Ambani told shareholders on Wednesday.
The Aramco deal was initially expected to be completed by March 2020.
The Indian group has secured investment from a string of companies, including Facebook, Intel and Qualcomm for its digital platform Reliance Jio that helped the company to become net-debt free.
Google on Wednesday also moved to back Reliance Jio Platforms by buying a 7.7% stake for $4.5 billion. Jio Platforms has music, movie apps and telecoms.
Ambani said: "Our equity requirements have already been met. Nevertheless, we at Reliance value our over two-decade long relationship with Saudi Aramco and are committed to a long-term partnership."
He said Reliance would approach Indian regulators to spin off-its oil-to-chemical business into a separate subsidiary to facilitate the Aramco partnership opportunity. "We expect to complete this process by early 2021," Ambani said.
Ambani also said that Reliance had been approached by other international companies for strategic partnerships in its petrochemical business, including in utilising petchem feedstocks.
"These potential partnerships will help us build competitive manufacturing capacity at our existing sites to serve the deficit Indian market that still depends on large-scale imports of chemicals," he added.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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