Aramco needs crude at over $65 to raise capex, buy RIL stake, say analysts
NEW DELHI: Strained capital expenditure budgets for Saudi Aramco and a parallel fall in crude oil prices are both factors that may have delayed the company picking up a stake in Reliance Industries’ oil-to-chemical (O2C) unit, note analysts from global brokerage house Jefferies. However, a crude price averaging at around $65 per barrel would help
Aramco achieve the required capex to buy a stake, they added, since both companies have indicated that talks are still going on regarding their earlier announced partnership. In August 2019, Reliance had announced that talks had begun for the sale of a 20 per cent stake in the O2C business to Aramco.
A non-binding MoU was signed between the two entities, though the deal has so far failed to fructify due to undisclosed reasons. Analysts have noted even earlier that the turmoil in crude oil prices last year had potentially complicated valuation negotiations. However, both entities indicate that they are continuing to discuss the deal.
