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Saudi Aramco To Acquire 20 Percent Stake In Indian Reliance Refinery

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Saudi state-oil giant Aramco is in advanced talks to acquire a roughly 20 percent stake in Reliance Industries Ltd’s oil refining and chemicals business for about $20 billion to $25 billion in Aramco’s shares, Bloomberg News reported on Monday.

Reliance Industries Limited is an Indian multinational conglomerate company, headquartered in Mumbai, India.

The Saudi Arabian firm is discussing the purchase of a roughly 20 percent stake in the Reliance unit for about $20 billion to $25 billion worth of Aramco shares, the people said, asking not to be identified because the information is private. Reliance, which is backed by Indian billionaire Mukesh Ambani, could reach an agreement with Aramco as soon as the coming weeks, the people said.

Reliance announced a sale of a 20 percent stake in its oil-to-chemicals business to Aramco for $15 billion in 2019, but the deal stalled after oil prices and demand crashed last year due to the pandemic.

During Aramco’s earnings briefing earlier in August, Chief Executive Officer Amin Nasser said the company was still doing due diligence on the deal.

In late June, Reliance’s billionaire chairman Mukesh Ambani said it hopes to formalise its partnership with Aramco this year and its Chairman Yasir Al-Rumayyan will join the Indian conglomerate’s board as an independent director.

Shares in Reliance extended gains to as much as 2.6 percent in Mumbai after the Bloomberg News report.

A deal would forge closer ties between the world’s biggest oil exporter and one of the fastest-growing energy consumers.

It would seal more than two years of negotiations and mark Aramco’s first all-stock deal since its initial public offering in 2019. Ambani confirmed talks about a deal with an implied stake valuation of $15 billion that same year. Discussions were delayed by the onset of the coronavirus pandemic and slump in oil prices.

Energy markets have since recovered, with crude prices jumping around 35 percent this year to almost $70 a barrel. Aramco said last week due diligence on a deal with Reliance was underway.

A transaction would boost Aramco’s sales of crude to India. For Reliance, it would help to lock in a steady supply of oil for its giant refineries and make the Indian company a shareholder in Aramco. Based on Aramco’s market valuation of about $1.9 trillion, a transaction would give Reliance a stake of around 1 percent.

Details of the potential transaction are still being negotiated, and talks could drag on longer or fall apart, the people said. A representative for Aramco declined to comment. The Saudi government’s Center for International Communication didn’t immediately respond to an email requesting a comment.

A representative for Reliance said the company does not have anything to add beyond Ambani’s comments at the shareholders’ meeting in June when the conglomerate appointed Aramco Chairman Yasir Al-Rumayyan to the board. Ambani had said Reliance could finalize an investment deal with the oil producer this year.

The Saudi government sold 2 percent of Aramco in the IPO, raising almost $30 billion. It’s still the largest first-time share sale on record.

Crown Prince Mohammed bin Salman, the de facto ruler, said in April that the kingdom was in talks to sell a 1 percent stake in Aramco to a “leading global energy company.” He didn’t disclose which one.

“This deal could be very important in strengthening Aramco’s sales in the country where this company resides,” the prince had said.

Saudi Arabia shipped 613,000 barrels a day of crude to India in July, around 10 percent of its total exports.

The transaction would help Aramco reach its goal of more than doubling refining capacity to between 8 million and 10 million barrels of crude a day. The Saudi firm had 3.6 million barrels a day of capacity at the end of last year, including stakes in joint ventures.

Aramco took full ownership of Motiva and its Port Arthur refinery in 2017 from its joint-venture partner Royal Dutch Shell PLC.

The $6.6 billion expansion would build two new petrochemical plants in addition to its existing 630,000-barrels-a-day Port Arthur refinery.

Nigeria’s state oil firm, the Nigerian National Petroleum Corporation (NNPC) is currently making move to acquire a 20 percent stake in the yet-to-be-completed Dangote Refinery, the world’s largest single-train petroleum refiner.

The federal cabinet approved the proposal by the state oil firm to invest $2.5 billion in a 20 percent share of Dangote’s oil refinery.

Minister of State for Petroleum, Timipre Sylva said in a statement that NNPC will pay $2.76 billion for the 20 percent share of the 650,000 barrel capacity petroleum refinery slated for commission next year.

The NNPC had said earlier that it’s working toward safeguarding the country’s energy security while its plans to buy a 20 percent stake in privately owned refineries would not affect efforts to rehabilitate the country’s four refineries.

However, the move by NNPC to invest in Dangote Refinery has generated some controversy within the system as Nigerians were unhappy that the state-owned oil firm that could not manage its own refineries is showing interest to buy into privately owned refiner.

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Fuel Scarcity: Petrol Sells N220 Per Litre in Nsukka

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Premium Motor Spirit, otherwise called petrol, now sells for between N200 and N220 per liter at the independent marketers’ service stations in Nsukka, Enugu State.

The News Agency of Nigeria is reporting the hike in the price against the official pump price of N162 per liter.

It said it started about a fortnight ago due to the scarcity of the commodity in the town and its environs.

Some residents of the town expressed deep worry over the development in separate interviews with NAN on Wednesday.

A civil servant, Stephen Ozioko, said the situation had further compounded the economic difficulties in the area.

Ozioko said many private car owners had been compelled to park their vehicles at home and move around in public transport.

He said: “Since the scarcity started, I decided to park my car and take public transport to the office and back home. N220 per liter is exorbitant and I cannot afford it considering my salary as a civil servant. I shall continue to use public transport until the situation returns to normal.”

A building material dealer, Timothy Ngwu, said the development had also led to an increase in transport fare in the area.

Ngwu said: “Some people now trek from Nsukka Old Park to Odenigbo Roundabout because of the 100 percent hike in fares from N50 to N100 by tricycle.

“Before now, transport fare from Nsukka to Enugu was N500, but transporters now charge between N800 and N1000.”

Also, a commuter bus driver, Victor Ogbonna, described the scarcity and hike in the price of petrol as “unfortunate and an ugly development”.

Ogbonna added: “Today, only a few filling stations are selling the commodity in Nsukka town, while others are shut.”

He alleged that some filling stations, which claimed to be out-of-stock, were selling to black marketers at night.

He said: “This is why black marketers have sprung up everywhere in the town, selling the commodity for about N300 per liter.”

NAN reports that virtually all the major marketers in the area have stopped the sale of petrol, claiming to be out-of-stock.

The people called on the government to urgently intervene in order to bring the situation under control and also put an end to its harsh economic effects on the messes.

NAN.

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DPR Targets N3.2T Revenue by Year-End

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Nigeria’s Department of Petroleum Resources (DPR) will hit the N3.2 trillion revenue target by December 2021, according to its Director/ Chief Executive Officer, Mr Sarki Auwalu.

Auwalu made the disclosure when he led a delegation of the DPR management team to the Executive Secretary of Petroleum Technology Development Fund (PTDF), Mr Bello Gusau, in Abuja on Wednesday.

He said that 70 percent of the revenue projection had already been met. “Last year, we exceed our revenue budget. We were given N1.5 trillion but we were able to generate N2.7trillion.

“This year, our revenue budget was N3.2 trillion. By the end of August 2021, we have generated up to 70 per cent.

“So, we with September, October, November and December, it is only the 30 per cent that we will work over,’’ he said

He noted that the government took advantage of fiscal terms within the old and new legislation, thereby creating a level of increased signature bonuses.

“We reorganise the work programme that is normally being done in the DPR to key into the new operational structure as we see it in the bill, now an act.

“That programme is being handled by the planning and strategic business unit as against what we use to have because the entire work programme is supposed to show not only technical but also commercial and viability of oil fields and to guarantee the return on investment for investors.

“We have also created an economic value and benchmarking unit to key into the new fiscal provisions of the PIA,’’ he said.

Commenting on capacity, Auwalu said the country stands at the advantage of exporting skills to emerging oil and gas countries across Africa with proper implementation of the newly passed Petroleum Industry Act.

This, he said, the DPR was ready to partner with the Fund to continue to build capacity in the oil and gas sector

He noted that the Federal Government was determined to create leeway that would encourage investors and drastically improve the nation’s petroleum industry.

He further noted that no fewer than 300 legal battles in the oil and gas industry in Nigeria, which had been stalled for the past 20 years in courts, had been resolved through alternative dispute resolution.

According to Auwalu, the DPR is strategising well to ensure effective implementation of the PIA.

Responding, Gusau commended the DPR for enabling the industry and enhancing business activities in the oil and gas sector.

He said that DPR remained the head of the oil and gas industry in Nigeria adding that the Fund was grateful to benefit from the wealth of ideas from DPR.

“The last time we visited, we had a good discussion and issues raised are being implemented like tracking the inflow of funds in signature bonus accounts.

“We extended the meeting and involved ministry of Finance, Accountant General office and even the Central Bank of Nigeria (CBN).

“Sitting at field development plans and attending significant meetings, helped us to know where and what the industry is trying to do and it also helps to inform our decisions in training and capacity plans,’’ he said

He urged the DPR to continue on its effort to ensure an efficient and productive petroleum industry in Nigeria

He assured collaboration with all as the head of the implementation committee of the Petroleum Industry Act. (NAN)

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Lagos Signs MoU With Energy Firms On Power Supply

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Lagos State Government, through its Ministry of Energy and Mineral Resources, on Tuesday signed a Memoranda of Agreement (MOA) with Ikeja Electric and Sahara Power Group to increase power supply and provide uninterrupted power to residents of the State.

The agreement between Lagos State Government and the energy firms signed will also include the distribution of free prepaid meters to low-income areas, with the pilot phase of 20,000 meters to be distributed in the Alimosho Local Government Area of the State.

Speaking during the signing of the agreement at the Lagos State Secretariat, Alausa, the Commissioner for Energy and Mineral Resources, Mr. Olalere Odusote, said the aim of the agreement is to increase power supply to at least 22 hours daily, from about eight to 12 hours daily.

The Commissioner said the implementation would start immediately, adding that Lagos State Government has identified a number of feeders that can provide power in 20,000 low-income areas with plans to replicate the initiative across the state.

He said: “This Memoranda of Agreement is to ensure the provision of uninterrupted power to residents, especially the low-income areas. It is also part of efforts to solve the problem of metering and infrastructure deficit to ensure these areas get power supply which is also measurable.

“The 20,000 meters have been procured by the state government and would be distributed free to low-income areas in Alimosho Local Government Area as the pilot phase. Our intention is to replicate this gesture in other areas of the state once the pilot phase is successfully executed.

“We have identified a number of feeders that can provide power in these communities and implementation would start immediately.”

Also speaking, the Managing Director of Ikeja Electricity Distribution Company (IKEDC), Folake Soetan expressed the firm’s readiness to support Lagos State Government in ensuring uninterrupted power supply to residents of the State.

In his address, the Managing Director of Sahara Power Group, Anthony Youdeowei, said his company will be transparent in its dealings with the Lagos State Government and Ikeja Electric to provide power supply for Lagosians.

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