Reliance-Aramco Deal: Reliance Industries chairman Mukesh Ambani’s decision to sell 20 percent stake of his firm’s oil-to-chemicals business to Saudi national oil company Aramco will allow RIL to have a strong presence in the global petrochemicals market dominated by western oil giants. Petrochemicals market that is pegged at over $540 billion in 2018 is expected to grow at the compound rate of more than 8% over the next decade. There are synergies between the operations of two companies as Reliance is shifting its focus from oils-to-chemicals while Aramco has the world’s largest petrochemical cracker plant, said a top former official.
Global petrochemicals market includes products like methanol, ethylene, propylene, butadiene, benzene among others is expected to grow to nearly $1 trillion by 2025. However, it is dominated by western companies like ExxonMobil, British Petroleum, Royal Dutch Shell, Chevron, LyondellBasell and others like Mitshui Chemicals.
Reliance has the world’s largest integrated refinery in Jamnagar, Gujarat with state of the art technology that can process even heavy and sour crude oil.
RIL has already announced that its Jamnagar refinery will only be producing aviation turbine fuel (ATF) and high-value petrochemicals.
“This signifies perfect synergy between the world’s largest oil producer and the world’s largest integrated refinery and petrochemicals complex,” said Mukesh Ambani while addressing the 42nd AGM of RIL.
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“Reliance has developed a future-ready Oil-to-Chemical strategic vision to, ?progressively, transform the Jamnagar ?refinery from a leading producer of fuels to chemicals,” the company said in its annual report a day before its annual general body meeting. The deal with Aramco will allow the company to take advantage of this decision.
“There will be synergy between Aramco and Reliance and Reliance may take part in Aramco’s large petrochemical crackers. Because RIL also has petrochemicals and Aramco has the world’s largest petrochemical cracker,” said SC Tripathi, former petroleum secretary.
The combined might of Reliance Industries and Saudi Aramco will allow them to exert more influence in the global petrochemicals market dominated by western players.
“Synergies will be there. Because both of them are large producers of petrochemicals then they can possibly control the international market to a large extent,” SC Tripathi told Financial Express Online.
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