Aramco's chairman joins Reliance's board, signaling progress for long-awaited stake sale

Saudi Aramco Chairman Yasir al-Rumayyan has joined the board of Reliance Industries as an independent director, bolstering ties with a key crude customer and increasing the likelihood of the Saudi oil giant purchasing a stake in the Indian refiner.

"His joining our board is the beginning of internationalization of Reliance," Reliance Chairman Mukesh Ambani said at his company's annual meeting. "Continued engagement and resolve from both sides, even during this pandemic, is a testimony of strong relationship between Saudi Aramco and Reliance. I expect our partnership to be formalized in an expeditious manner this year."

In 2019, Reliance announced the sale of a 20% stake in its oil-to-chemicals business for $15 billion to Saudi Aramco, the world's top oil exporting company.

But the deal seemed to founder in 2020 after the oil price crash and demand destruction caused by the pandemic, which saw Aramco tighten its belt. Last year, the company slashed its capex budget by about half, to under $25 billion, and for this year it has said it expects capex to be about $35 billion, down from original guidance of $40 billion to $45 billion.

However, with stronger oil prices lately and Aramco's issuance of a $6 billion bond earlier this month, the company's financial position has strengthened.

If the transaction goes ahead, it will also see Aramco supply 500,000 b/d of crude on a long-term basis to Reliance's Jamnagar refinery complex.

A joint venture with Reliance would guarantee a stable channel for crude at a time when Aramco is going ahead with plans to increase its maximum sustainable production capacity to 13 million b/d, from 12 million b/d.

In addition to serving as Aramco's chairman, Rumayyan is also the governor of the Public Investment Fund, Saudi Arabia's sovereign wealth fund.