Current Affairs

Issue

Saudi Arabia’s national oil company Aramco and Reliance industries are re-evaluating their proposed deal that was negotiated some years ago.

 

Background

The deal involved investment by Aramco in Reliance Industries’ oil to chemicals (O2C) business.

 

Details

• The proposed investment plans by Aramco was affected by the Covid-19 pandemic. The prices of crude oil also fell as demands collapsed.

• As profits and revenue experienced shortfall during this period, Aramco was unable to acquire 20 percent stake in Reliance’s O2C business.

• Reliance also announced that it will become a net zero carbon emitter by 2030 and modify its Jamnagar refinery to produce only jet fuels and petrochemicals, affecting the deal.

 

The concerns

• Aramco feels that petrochemical assets should be given more time and investment so that the energy transition can be gradual.

• The Jamnagar refinery, which is a major part of Aramco’s plans, will be converted into an integrated solar photovoltaic module factory, an advanced energy storage factory, an electrolyser factory and a fuel cell factory.

• Aramco also feels that large part of its investments could be used to repay loans of Reliance and some amount would be used to fund green energy related projects.

 

Aramco

• Aramco is Saudi Arabia’s public petroleum and natural gas company. It is based in Dhahran. The company is counted among one of the largest by revenue.

• The company is involved in managing Ghawar Field which is the world's largest onshore oil field and Safaniya Field, the world's largest offshore oil field.