Saudi Arabia’s Saudi Aramco and India’s Reliance Industries Limited (RIL) yesterday signed a non-binding letter of intent regarding a proposed investment in the oil to chemicals (O2C) division comprising the refining, petrochemicals, and fuels marketing businesses of RIL. Saudi Aramco’s potential 20% stake is based upon an enterprise value of USD75 billion for the O2C division. This would be one of the largest foreign investments ever made in India.

Saudi Aramco and RIL have a long-standing crude oil supply relationship for more than 25 years. Saudi Aramco is the world’s largest and lowest cost-per-barrel producer of crude oil, is geographically close to India, and offers a wide range of crude supply options. To date, it has supplied approximately 2 billion barrels of crude oil for processing at RIL’s refinery in Jamnagar.

RIL’s Jamnagar refinery is the largest and most complex refinery in the world, with deep integration of refining and petrochemical activities across multiple manufacturing facilities. The proposed investment would result in Saudi Aramco supplying 500 KBPD of Arabian crude oil to the Jamnagar refinery on a long term basis.

“I am truly delighted to welcome Saudi Aramco, one of the largest business enterprises in the world, as a potential investor in our Oil to Chemicals division. We have a long-standing crude oil relationship with Saudi Aramco and we would be happy to see this further strengthened with this investment. Saudi Aramco’s interest is a strong endorsement of the quality of our assets and operations as well as of the potential of India,” said Mukesh Ambani, chairman and managing director of Reliance Industries Limited.

Under the non-binding LOI, the proposed investment is subject to due diligence. The definitive agreement will be subject to regulatory and other customary approvals. An announcement will be made once a definitive agreement is executed.

The Aramco deal is the latest in a series of moves by Reliance to sell non-core assets, or forge joint ventures, to reduce its debt of approximately INR2,882 billion (USD 40.5 billion). Last month Reliance announced the sale of the tower assets it owns through an investment trust to Canada’s Brookfield Asset Management for INR250 billion (USD3.5 billion).

Sources this month also told Reuters that Reliance is in talks with U.S. e-commerce giant Amazon.com Inc to sell a stake in its retail venture.