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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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Nigeria’s Dangote Refinery Overtakes European Giants in Capacity, Bloomberg Reports

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The Dangote Refinery has surpassed some of Europe’s largest refineries in terms of capacity, according to a recent report by Bloomberg.

The $20 billion Dangote refinery, located in Lagos, boasts a refining capacity of 650,000 barrels of petroleum products per day, positioning it as a formidable player in the global refining industry.

Bloomberg’s data highlighted that the Dangote refinery’s capacity exceeds that of Shell’s Pernis refinery in the Netherlands by over 246,000 barrels per day. Making Dangote’s facility a significant contender in the refining industry.

The report also underscored the scale of Dangote’s refinery compared to other prominent European refineries.

For instance, the TotalEnergies Antwerp refining facility in Belgium can refine 338,000 barrels per day, while the GOI Energy ISAB refinery in Italy was built with a refining capacity of 360,000 barrels per day.

Describing the Dangote refinery as a ‘game changer,’ Bloomberg emphasized its strategic advantage of leveraging cheaper U.S. oil imports for a substantial portion of its feedstock.

Analysts anticipate that the refinery’s operations will have a transformative impact on Nigeria’s fuel market and the broader region.

The refinery has already commenced shipping products in recent weeks while preparing to ramp up petrol output.

Analysts predict that Dangote’s refinery will influence Atlantic Basin gasoline markets and significantly alter the dynamics of the petroleum trade in West Africa.

Reuters recently reported that the Dangote refinery has the potential to disrupt the decades-long petrol trade from Europe to Africa, worth an estimated $17 billion annually.

With a configured capacity to produce up to 53 million liters of petrol per day, the refinery is poised to meet a significant portion of Nigeria’s fuel demand and reduce the country’s dependence on imported petroleum products.

Aliko Dangote, Africa’s richest man and the visionary behind the refinery, has demonstrated his commitment to revolutionizing Nigeria’s energy landscape. As the Dangote refinery continues to scale up its operations, it is poised to not only bolster Nigeria’s energy security but also emerge as a key player in the global refining industry.

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Presidency Set to Roll Out 2,700 CNG-Powered Vehicles Ahead of Tinubu’s Anniversary

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In a significant move toward a greener and more sustainable future for Nigeria’s transportation sector, the Presidency has announced plans to launch approximately 2,700 Compressed Natural Gas (CNG)-powered buses and tricycles before May 29, President Bola Tinubu’s first year in office.

The ambitious initiative, spearheaded by the Special Adviser to the President on Information and Strategy, Mr. Bayo Onanuga, aims to address pressing issues of rising fuel costs, environmental pollution, and the need for more efficient mass transit options across the country.

With the impending rollout, Nigeria is poised to take significant strides towards joining the league of nations that have embraced CNG as a viable alternative fuel source for public transportation.

The move comes as part of the Presidential CNG Initiative, launched by President Tinubu in October 2023, shortly after the removal of petrol subsidy.

The Presidential CNG Initiative, designed to deliver cheaper, safer, and more climate-friendly energy options, has been allocated a substantial budget of N100 billion from the palliative budget.

This funding will support the purchase of 5,500 CNG vehicles, including buses and tricycles, along with 100 electric buses and over 20,000 CNG conversion kits.

Also, the initiative encompasses the development of CNG refilling stations and electric charging stations nationwide, ensuring that the infrastructure is in place to support the transition to cleaner energy sources.

Mr. Onanuga emphasized that all necessary preparations have been made for the delivery of the first set of critical assets for deployment and launch of the CNG initiative ahead of the first anniversary of the Tinubu administration.

Approximately 2,500 tricycles are expected to be ready before May 29, 2024, with plans to deliver 200 units of buses within the same timeframe.

The deployment of CNG buses and tricycles marks a significant milestone in Nigeria’s energy transition journey.

It not only reduces the country’s dependence on traditional fossil fuels but also contributes to mitigating environmental pollution and improving air quality in urban centers.

In addition to the rollout of CNG vehicles, the initiative includes partnerships with the private sector to establish conversion workshops and refueling sites across 18 states before the end of 2024.

These efforts underscore the collaborative approach taken by the government and industry stakeholders to facilitate the adoption of CNG technology and drive sustainable growth in the transportation sector.

As Nigeria prepares to celebrate President Tinubu’s first year in office, the rollout of 2,700 CNG-powered vehicles stands as a testament to the government’s commitment to fostering innovation, promoting environmental stewardship, and improving the lives of its citizens through transformative initiatives in the energy sector.

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Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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