Sources say that Saudi Aramco and Repsol have reached an impasse in their talks to purchase a stake in Repsol’s renewables unit.

Two sources with knowledge of the situation said that talks between Aramco, the Saudi state oil company, and Repsol Renewables have reached a deadlock.

One source said that the talks about the potential investment of 1 billion euros ($1.2 billion) have come to an end and there is no plan at this time to revive them.

Aramco was looking to improve efficiency, cut costs and sell assets when it hit the impasse.

The talks began last year when it was reported that Repsol received an unsolicited offer for a minor stake in its Renewable Assets unit. UBS analysts estimated the value of this minority stake at $6.6 billion, in a research note published in February.

The Spanish company has diversified into low-carbon and renewable businesses but this still represents a small part of its revenue.

Repsol and Aramco refused to comment.

Repsol is among the few European oil giants still willing to invest in renewables after most have backed away from plans to develop greener technologies as they proved to be less profitable than drilling oil and gas.

The company continues to invest in energy transition, while allowing investors to take a minority stake in wind farms and solar power plants within its unit. This helps fund the diversification of the business.

Repsol has increased its production in recent months from wind and solar farms in the United States and Chile. Josu Imaz, CEO of Repsol, recently told analysts that the company's renewable ambitions are being moderated to focus on returns.

Repsol sold its 25% stake in renewables to Credit Agricole, a French bank, and Energy Infrastructure Partners, a Swiss asset manager, for 905 millions euros. This deal valued the entire unit at 4,38 billion euros (including debt).

(source: Reuters)