Mukesh Ambani Image Credit: Bloomberg

MUMBAI: The head of India's Reliance said Monday that it has agreed to sell a 20 percent stake in its oil refinery and chemical unit to Saudi Aramco in a deal worth $15 billion.

"This is the biggest foreign investment in the history of Reliance and also amongst the largest foreign investments ever in India," India's richest man Mukesh Ambani said at the company's annual general meeting in Mumbai.

The preliminary agreement is based on a valuation of $75 billion for Reliance's Oil to Chemicals (O2C) division comprising the refining, petrochemicals and fuels marketing businesses of the Indian firm, according to a Reliance statement.

The big tech push comes as the group bolsters its consumer-focused retail and telecoms units to match the strength of its key oil-and-gas business. Its startup Jio has upended the telco sector by providing cheap data connectivity and becoming India's top mobile operator by subscribers in just three years.

The conglomerate is planning to sell a fifth of its oil-to-chemicals business to Saudi Aramco in what would be one of the largest foreign investments in the country, Ambani, Asia's richest man, said Ambani.

The deal, which values Reliance's oil-to-chemicals business at $75 billion including debt, also includes an agreement for Aramco to sell 500,000 barrels per day (bpd) to Reliance's Jamnagar refinery in the western Indian state of Gujarat.

Reliance currently buys around 220,000 bpd of oil from Aramco. The state-run Saudi company, the world's biggest oil producer, declined to comment on the Reliance report.

Why the stake sale?

The stake sale comes as Reliance pushes to become a zero net debt company, which Ambani said will happen by March 2021.

The company has been forging partnerships to that end and said earlier this month it would deepen its ties with global oil major BP by forming a fuel retailing joint venture.

Reliance had outstanding debt of nearly $42 billion as of June 30, and cash and cash equivalents of roughly $18.5 billion.

Ambani was joined on Monday by Microsoft Chief Satya Nadella via video conferencing for the AGM being held on a public and stock exchange holiday in India and many countries.

Microsoft and Jio will partner to launch new cloud data centres in India, the two executives said, a move probably aimed at taking on Amazon's growing cloud business.

Jio will provide free cloud services for startups for as little as 1,500 rupees ($21) a month, which Ambani said was less than one-tenth of global rates.

"By working together to develop innovative and affordable cloud-enabled digital solutions ... we will accelerate the digitisation of the Indian economy and make Indian businesses globally competitive," Ambani said in a statement.

Jio, which has crossed the 340 million subscriber mark, said it will launch Jio GigaFiber broadband services next month.

The service will include access to television channels, fixed-line telephone calling and video conferencing and will be priced between 700 rupees to 10,000 rupees per month.