Sensex Trades Over 500 Points Lower, Dow Futures Down By 24 Points

Besides refineries and petrochemical plants, the O2C business also comprises a 51% stake in the fuel retailing business. It, however, does not include the upstream oil and gas producing assets such as the flagging KG-D6 block in the Bay of Bengal.

Reliance had in 2019 put US$ 75 billion as the value of O2C business after signing a non-binding letter of intent with Saudi Aramco.

Aramco buying a 20% stake in the O2C business would allow Reliance to build financial muscle as it carves out space for itself in the highly competitive omnichannel retail. It would also allow Aramco to have a stake in one of the best refineries in the world.

Reliance refineries are one of the most complex in the world, allowing it to earn a significant premium to the benchmark Singapore gross refining margin. Its petrochemical complexes rank among the biggest in the world, whose dependency on outside raw materials is minimal. It has leadership positions both in the domestic polymer and polyester markets.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

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Disclosure: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research ...

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