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Reliance Industries’ re-evaluation of Saudi Aramco deal won’t impact co's credit quality: Moody’s

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RIL on Friday said that it had decided to re-evaluate the deal under which Saudi Aramco was to invest roughly $15 billion in the company's oil-to-chemicals (O2C) business.

Reliance Industries’ re-evaluation of Saudi Aramco deal won’t impact co's credit quality: Moody’s
Moody's Investors Service on Tuesday said that Reliance Industries' (RIL) decision to re-evaluate the deal with Saudi Aramco will not impact the credit rating of the Mukesh Ambani-led company.
RIL on Friday said that it had decided to re-evaluate the deal under which Saudi Aramco was to invest roughly $15 billion in the company's oil-to-chemicals (O2C) business.
"Due to evolving nature of Reliance's business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in O2C business in light of the changed context," RIL said in a statement on Friday.
“The decision to re-evaluate the transfer and the stake sale will not impact RIL's credit quality because the company already has a strong balance sheet to accommodate future investments required for its various businesses,” Moody’s said today.
The 20 percent stake sale in the unit was announced in 2019 but was delayed as oil prices and demand crashed last year due to the COVID-19 pandemic.
The company will continue to be Aramco's preferred partner for private sector investments in India and it will collaborate with Saudi Aramco and SABIC for investments in Saudi Arabia, RIL said on November 19.
According to Moody’s, the sale would have strengthened the company's balance sheet and liquidity as it continues to incur capital spending for its digital services, and new energy and retail businesses.
Moody’s expects the company to generate sufficient cash flows from operations each year to fund its capital spending.
RIL's announcement to revisit its earlier plan of divesting stake in its O2C business will allow the company to reassess the interlinkages and synergies between its legacy O2C business and its new energy business that was announced recently,” the rating agency said.
It added that this will be important as RIL has a target of achieving carbon neutrality by 2035. The Jamnagar Refinery in India's Gujarat state, which houses the bulk of the company's O2C assets, will also be the incubation centre for its new energy business, it said.
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