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Saudi Aramco in $15B play to buy 20% stake in Reliance's oil refining division

State-owned oil giant Saudi Arabian Oil Co. signed a nonbinding letter of intent to acquire a 20% interest in the oil-to-chemicals division of India's Reliance Industries Ltd.

The potential stake is based on a $75 billion enterprise value of the division, which results into an overall valuation for the stake of $15 billion.

"We have a long-standing crude oil relationship with Saudi Aramco and we would be happy to see this further strengthened with this investment," Reliance Chairman and Managing Director Mukesh Ambani said in an Aug. 12 statement.

Saudi Arabian Oil, or Saudi Aramco, has supplied approximately 2 billion barrels of crude oil for processing at Reliance's Jamnagar refinery to date. The proposed investment would result in Saudi Aramco supplying 500 thousand barrels per day of crude oil to the Jamnagar refinery on a long-term basis.

The proposed investment is subject to due diligence. Any executed definitive agreement will be subject to regulatory and other customary approvals.

The potential transaction would be Aramco's third stake acquisition in Asian refineries and petrochemical businesses this year preceded by agreements to purchase stakes in South Korea and China.