Less than a week after inducting Saudi Aramco chairman Yasir al-Rumayyan on the board of Reliance Industries, Mukesh Ambani has signed an agreement with Abu Dhabi National Oil Company to enter into business in the Gulf; the deal signifies the start of global expansion by RIL
(AF) Asia’s richest billionaire Mukesh Ambani has signed his first deal in the Gulf after welcoming Saudi Aramco chairman Yasir al-Rumayyan as an independent director on the board of his flagship company Reliance Industries Ltd (RIL).
RIL announced on Tuesday that it has signed an agreement with Abu Dhabi National Oil Company (ADNOC) to set up a new world-scale chemical facility that will produce chlor-alkali, ethylene dichloride and polyvinyl chloride (PVC) at TA’ZIZ in Ruwais, Abu Dhabi.
The exact investment amount has not been revealed, but industry sources say that RIL could be investing between $1.2 billion to $2 billion in the factory, which will be the biggest such complex in the Middle East.
ADNOC is expected to make a similar investment.
RIL has been a buyer of Gulf crude and gas for years, which has helped build deep roots with Qatar, Bahrain and Kuwait, aside from Saudi Arabia and the United Arab Emirates.
Ambani hinted in RIL’s 44th annual shareholders meeting (AGM) last week that in the company’s next phase of expansion, RIL is also looking at market access in the Gulf region for a range of its businesses – from hydrocarbons, to renewables and retail.
The ADNOC agreement, it said, will capitalise on the growing demand for chlor-alkali, ethylene dichloride and polyvinyl chloride – critical industrial raw materials – and leverage the strengths of ADNOC and RIL as global industrial and energy leaders.
The agreement also capitalises on Ambani’s good ties with Saudi Aramco, the key supplier of crude oil to RIL, which appears likely to grab a stake in the Indian refiner.
At the AGM, Ambani also reiterated that a $15-billion investment by Saudi Aramco in the oil-to-chemicals business is on track and should conclude this year.
RIL has already hived off its petrochemical and refining business into a separate subsidiary, as a precursor to the Saudi Aramco deal.
According to RIL and Aramco, the agreement continues the momentum of ADNOC’s downstream and industry growth plans in line with ADNOC’s 2030 strategy. The Abu Dhabi company has said it plans to invest $45 billion in both upstream and downstream operations as part of a longer-term strategy till 2030.
In the downstream sector, it has a target to treble petrochemicals production to 14.4 million tonnes annually by 2025.
ADNOC, which counts India as its second-biggest market, also invited other Indian companies to invest in the UAE’s downstream sector. Indeed, it has expanded its partnership with other Indian oil companies as well as RIL in recent years.
These include offering exploration rights for an onshore block in Abu Dhabi to Bharat Petroleum Corp and Indian Oil Corp in 2019.
In 2018 ADNOC also sold a 10% participating interest in Abu Dhabi’s offshore Lower Zakum Concession to a consortium made up of ONGC Videsh, IOC and Bharat PetroResources.
Ambani said in a statement: “We at Reliance are excited to enter into a strategic partnership with ADNOC for establishing a world-class and world-scale chemical project.”
This milestone also reaffirmed RIL’s faith in the global vision of the UAE’s leadership and showed the enormous potential in advancing India-UAE cooperation, he said.
“This is a significant step in globalizing Reliance’s operations, and we are proud to partner with ADNOC in this important project for the region,” Ambani said.