Mukesh Ambani eyes major deal! Even Gautam Adani stepped back from race, Reliance to become biggest…, deal is about...
Rosneft, a big player in the Russian energy sector, is looking to dispose its investment in India's Nayara Energy. News sources have indicated that Rosneft entered discussions with Reliance Industries (RIL), after previously failing to inspire interest from numerous other Indian firms, as well as a lack of interest from government-owned firms. Rosneft had put a $20 billion valuation on the stake previously, which was simply too high and had scared off would-be buyers. Reliance and Rosneft negotiations are currently at a very early stage. Russia's Rosneft in early talks with Reliance to sell stake in Indian unit
Russian oil company PJSC Rosneft Oil Company is discussing selling its 49.13 percent stake in Nayara Energy with Reliance Industries, sources told news agency PTI. Nayara owns a 20-million-tonnes-per-year oil refinery and 6,750 petrol pumps across India.
Reliance is holding preliminary discussions for the purchase of Nayara Energy, which might allow it to become larger than state-owned Indian Oil Corporation (IOC) and would also expand its advantage in fuel retail. However, these negotiations are in the preliminary stages, and there's no guarantee a deal will go through, as valuation is still a key issue, according to three people with direct knowledge of the matter, PTI reported.
In the last year, Rosneft's senior officials have traveled to India three times, including visits to Ahmedabad and Mumbai for talks with potential investors. Due to Western sanctions limiting Rosneft's ability to repatriate earnings from its Indian operations, the Russian oil company is looking to exit its investment in Nayara Energy. As a result, the ideal buyer would likely be a company with significant overseas revenues or an international presence, enabling them to make swift payments abroad for the acquisition.
Sources informed PTI that Reliance earns a lot of income from international markets as a major fuel exporter. This makes them a likely candidate to buy Rosneft's stake in Nayara. Emails sent to Rosneft for comment were not returned, and a Reliance spokesperson told PTI, 'As a policy, we do not comment on media speculation and rumours.'
'Our company evaluates various opportunities on an ongoing basis,' the spokesperson told PTI. 'We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges,' the spokesperson added.
Rosneft, which purchased Essar Oil in 2017 for $12.9 billion, has run into challenges in fully benefiting from its India business because of international sanctions that hinder the repatriation of earnings. After the acquisition, Essar Oil was renamed Nayara Energy. In 2024, the Russian energy company decided to exit Nayara and has been looking for buyers. Rosneft is not alone in this. UCP Investment Group, a major Russian financial company, is also seeking to sell its 24.5 percent stake in Nayara Energy.
The remaining ownership in Nayara Energy includes Trafigura Group, which has a 24.5 percent interest in Nayara, as well as a number of retail investors. According to sources, if a transaction were completed, Trafigura might also exit the business, potentially within months, and probably on similar terms. The stakes held by Rosneft and UCP were offered to a number of major players, including Reliance Industries, the Adani Group, Saudi Aramco, and a state-owned consortium of ONGC and IOC. However, Rosneft's $20 billion valuation for Nayara was seen to be too high by almost every potential investor, and this has held up any deal for the time being. Adani Group turned down the investment proposal for Nayara Energy
The Adani Group turned down the investment proposal for Nayara Energy, given that oil refining is perceived as a sunset industry, while the world is transitioning quickly to clean energy and decarbonization. In addition to the high price ask, sources said Adani's strategic partnership with French energy giant TotalEnergies contributed to the decision. The two companies have multi-billion-dollar agreements in the city gas and renewable energy spaces. As part of their strategic partnership agreement, Adani agreed to limit future investments in fossil fuels to only natural gas, meaning Adani could not be part of the Nayara deal. Reliance to become the largest oil refiner if…
Nayara makes the most strategic sense for Reliance, according to sources. Reliance operates twin refineries in Jamnagar, Gujarat with a combined capacity of 68.2 million tonnes per year, in very close proximity to Nayara's 20-million-tonnes-a-year refinery in Vadinar, also in Gujarat.
If Reliance buys Nayara, it would exceed IOC's capacity of 80.8 million tonnes per year to become India's largest oil refiner. Most importantly, Nayara's network with a total of 6,750 petrol pumps would give Reliance a good grip on the fuel retail side, where it currently only runs 1,972 out of India's 97,366 fuel stations. Mukesh Ambani eyes major deal! Even Gautam Adani steps back from the race
Sources indicate that Rosneft reduced its valuation to USD 17 billion since the talks began; nonetheless, companies like Reliance still find this valuation too high. But there has been no formal deal, and Rosneft has made no official statement.
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