Rosneft and investment consortium to acquire Essar Oil

Essar Energy Holdings Limited and Oil Bidco (Mauritius) Limited—companies incorporated and managed under the laws of Mauritius—the controlling shareholders of Essar Oil Limited (EOL) have entered into separate definitive agreements for the sale of 98% of EOL.

The first sale and purchase agreement envisages the sale of 49% to Petrol Complex Pte. Ltd (a subsidiary of PJSC Rosneft Oil Company); the second envisages the sale of the remaining 49% to Kesani Enterprises Company Limited (owned by a consortium led by Trafigura) at an enterprise valuation of Rs 72,800 crore ($10.9 billion). An additional Rs 13,300 crore ($2 billion) will be paid for the acquisition of Vadinar Port, which has world-class storage and import/export facilities.

The all-cash deal encompasses EOL’s 20 million tonne refinery in Gujarat, India, and its pan-India retail outlets. The closing of the transaction is conditional upon receiving requisite regulatory approvals and other customary conditions. The parties expect to obtain the relevant approvals before the end of this year. Investing in EOL, which operates one of the world’s most complex refineries and runs India’s largest private sector retail network, gives the new stakeholders a strong foothold in the Indian market that will witness robust demand growth for petroleum products in the long term. The growth for refined petroleum products in the Indian market for the next five years is expected to be in the 5%-7% range. EOL’s value has also been strengthened by the integrated nature of its business and the strategic positioning of its assets.

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