Saudi Aramco remains in discussion with Reliance Industries for a potential deal to buy a 20 per cent stake in its oil-to-chemicals (O2C) unit, Morgan Stanley said on Monday citing the Saudi firm’s analyst call post announcing 2020 earnings.

Mukesh Ambani had in August 2019 announced talks for the sale of a 20 per cent stake in the O2C business, which comprises its twin oil refineries at Jamnagar in Gujarat and petrochemical assets, to the world’s largest oil exporter. The deal was to conclude by March 2020 but has been delayed.

“Saudi Aramco’s calendar year 2020 conference call indicated that it is still in discussion with Reliance to evaluate existing opportunities as potential partners, regarding the non-binding MoU signed with Reliance for its O2C business,” Morgan Stanley said in a note.

Besides refineries and petrochemical plants, the O2C business also comprises a 51 per cent stake in the fuel retailing business. It, however, does not include the upstream oil and gas producing assets such as the flagging KG-D6 block in the Bay of Bengal.

Reliance had in 2019 put $75 billion as the value of O2C business after signing a non-binding letter of intent with Saudi Aramco. “Saudi Aramco remains in discussion with Reliance for a potential partnership,” Morgan Stanley said.

With asset prices, industry outlook, and margins back to August 2019 levels, it saw a revival of the earnings upgrade cycle, led by energy. Multiples should surprise positively too as clarity on new energy investments rises.