NEW DELHI: Tight capital spending budgets for Saudi Aramco and a parallel fall in crude oil prices are both possible reasons for the company’s delay in raising interest in an oil-producing unit. chemically (O2C) Reliance Industries, note analysts from Jefferies house global breakdown. However, an average crude price of around $ 65 per barrel would help
Aramco will fulfill the capex required to buy a bet, they said, as the two companies have indicated that talks are still ongoing regarding the partnership announced earlier. In August 2019, Reliance announced that talks had begun to sell a 20 per cent stake in the O2C business to Aramco.
A non-binding MoU has been signed between the two organizations, although the contract has so far not been successful due to undisclosed reasons. Analysts have noticed even earlier that valuation talks could be difficult with the turmoil in crude oil prices last year. However, both groups state that they are continuing to consider the contract.
Investment bank Morgan Stanley noted last week that the Aramco 2020 employment conference call indicates that it is “still in contact with Reliance to assess the opportunities available. exists as potential partners, in relation to the non-binding MoU signed by Reliance for its O2C business. “Jefferies analysts add that Aramco’s IPO forecast highlighted its focus on downstream investments in high-growth economies in China, India and Southeast Asia. “Investment in the R2 O2C sub-group could provide an Aramco-like footprint – participation in the largest O2C project in India with a long-term raw supply agreement and participation in fuel sales through a joint RIL-BP campaign, ”they wrote. Aramco’s commitment to pay an annual installment of $ 75 billion, however, has limited its capex budget to about $ 35-40 billion.
Raw prices up again
The Suez tunnel blockage due to a ship that went ashore has stepped up Brent crude prices, which rose 4% to hit $ 64.4 per barrel.