Mukesh Ambani to become India’s oil magnate with stake purchase of THIS major Russian oil company; Reliance will become biggest…
New Delhi: Mukesh Ambani’s Reliance Industries is deliberating on closing a deal with the Russian oil giant PJSC Rosneft Oil Company, the talks for which are in an early stage.
What is the deal?
The talks are about sale of Rosneft’s 49.13 per cent stake in Nayara Energy, which operates a 20-million tonnes-a-year oil refinery and 6,750 petrol pumps in India, sources said. Reliance has held preliminary talks for the acquisition of Nayara. If it happens then it will help it overtake state-owned Indian Oil Corporation (IOC) to become India’s No.1 oil refiner. Since the discussions are in initial stage, there is no guarantee that they may lead to a definite deal as valuation remains a sticky ground, said sources.
Prior to the negotiations with Reliance Industries, top officials from Rosneft have visited India at least thrice in the last one year, including visits to Ahmedabad and Mumbai, for talks with potential investors.
Why Reliance Industries?
Rosneft is looking for a potential buyer who has substantial earnings overseas or is an international company, both of which could make quick overseas payouts for the stake. Actually, Rosneft wants to exit Nayara due to western sanctions which are limiting its ability to repatriate full earnings from India operations. Being a large exporter of fuel, Reliance has substantial overseas income, the sources said.
“As a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India (SEBI Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges,” a Reliance spokesperson said. Rosneft did not respond to any query.
What is relation between Rosneft and Essar Oil?
Rosneft acquired Essar Oil in 2017 in a USD 12.9-billion deal. Essar Oil was subsequently named Nayara Energy. Presently, Rosneft is unable to get full financial benefits from its Indian operations, including repatriating earnings, due to international sanctions.
PJSC Rosneft Oil Company decided to exit Nayara sometime in 2024 and began scouting for potential buyers. Alongside Rosneft, UCP Investment Group, a major Russian financial firm, is also selling its 24.5 per cent stake in Nayara.
Offer to Adani
The stake of Rosneft and UCP was offered to Reliance Industries, Adani Group, Saudi Aramco and state-owned ONGC/IOC combine among others.
According to sources, Saudi Aramco is a serious contender to take over Nayara as it will fulfil its long-desired ambition of having downstream presence in the world’s fastest growing oil market.
Aramco, the world’s largest oil exporter, had previously agreed to invest in a giant oil refinery-cum-petrochemical complex that state-owned firms had planned to build in Maharashtra, but that project hasn’t taken off due to land acquisition delays.
Reliance’s advantages
Reliance operates twin refineries, with a combined capacity of 68.2 million tonnes per annum at Jamnagar in Gujarat and Nayara makes the most sense for Reliance. Ambani’s company’s units are in the vicinity of Nayara’s 20-million tonnes-a-year unit at Vadinar, Gujarat and Nayara will help it cross IOC’s 80.8-million tonnes-a-year capacity to become No.1 refiner in the country.
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