Talks over the sale of a 20 percent stake in Reliance Industries Ltd's oil-to-chemical business to Saudi Aramco have stalled over price, four sources familiar with the matter said.
With the energy market hit by falling demand for crude due to Covid-19, Aramco wants the Indian conglomerate to review the $15 billion it agreed to sell the stake for last year, the sources told Reuters.
"Aramco has told Reliance that refining margins are terrible and are expected to remain subdued in Q3 at least, so they can't pay the price they have agreed pre-Covid," one of the sources said.
"In reality, Aramco does not have the money."
A second source said Reliance would wait for the market to recover rather than settling for a "drastic" revaluation of the asset.
Reliance and Aramco did not immediately respond to Reuters' emails seeking a response to the sources' comments.
The initial deadline for completion of the deal was March 2020.
Reliance Chairman Mukesh Ambani told shareholders on Wednesday it had been delayed due to "unforeseen circumstances in the energy market and the Covid-19 situation".
The Indian firm, however, remained committed to a long-term partnership with Aramco, he added.
Like other global players in a market awash with oil, Aramco, the world's top oil exporting firm, has seen revenues slide on fallout from the epidemic.
It had to extend the $69.01 billion payment schedule for a 70 percent stake in SABIC by three years to 2028 to be able to pay shareholder dividends in the region of $75 billion this year.
Reliance, which operates the world's biggest refining complex in western India, planned to use the proceeds from the Aramco deal to settle a part of a multi-billion-dollar debt.
However, in the meantime Reliance has secured investment from companies including Google, Facebook, Intel and Qualcomm QCOM.O for its digital platform Reliance Jio, helping it become net-debt free.
"Our equity requirements have already been met," Ambani said.
Reliance remained committed to a long-term partnership with Aramco and would spin off its oil-to-chemical business into a separate subsidiary to facilitate that. "We expect to complete this process by early 2021," Ambani said.
Reliance has also been approached by global companies for strategic partnerships in its petrochemical business, including in utilizing these feedstocks, Ambani said.