Reliance is preparing for today and tomorrow

Reliance is preparing for today and tomorrow

it’s been cooking for a few months now. but it seems the Reliance-Aramco deal is nearing completion. it will give Reliance Industries Limited (RIL) $25 billion in exchange for 20% equity. this deal helps a lot of people. Reliance, because it gives the company access to enormous capital. Aramco because it gives the Saudi Arabian company access to the Indian market and the ability to sell more crude oil. 

but there’s more. RIL will also get equity in Aramco in exchange. currently, Aramco is valued at a staggering $1.9 trillion and this deal would give Mukesh Ambani’s company a 1% stake in the biggest oil company in the world. 

this is the second attempt at a partnership between the two companies. the first one was in 2019 when Aramco was willing to part with $15 billion for 20% equity. but the pandemic and the subsequent lockdowns scuppered the deal. for the reason of this deal, earlier this year, the management of the company had created a wholly owned subsidiary called Reliance OTC limited. this is where all the refinery and petrochemicals business revenue would be recorded. 

this deal is important not just because of the cash, but also because it gives Reliance the capability to get access to crude oil at its large Jamnagar plant. this partnership will also help Reliance improve its margins. 

but this isn’t the only Reliance based news in the market these days. there has been another. even if slightly less headline grabbing. Reliance is flirting with green hydrogen based power.

preparing for tomorrow

the world is moving towards cleaner sources of energy. with the volatility in the prices of crude oil, alternative fuel sources are the favourable way forward to consistent and clean revenue. Ambani, not too long ago, had said that his company planned to be net carbon neutral by 2035. he also said that the company was planning to build four large factories, which would focus on solar, green hydrogen and fuel cells soon. this would help convert hydrogen into power. 

these factories would take significant cap-ex. and the Aramco deal couldn’t come at a better time for the company. through this deal, Reliance has made itself future ready.