Essar sells refining assets

INDIA’S Essar Group is selling 98% of its refining and retail business to Rosneft and a consortium led by oil trader Trafigura for US$10.9bn.

The deal for Essar Oil’s assets gives the buyers access to India’s fast-growing market, and allows Essar’s controlling family to service the conglomerate’s debts.

Essar Oil owns the Vadinar refinery in Gujarat, which at 20m t/y of capacity is India’s second largest, contributing 9% of India’s refining output, plus the company’s 2,700 fuel stations. The buyers will also pay US$2bn for the refinery’s neighbouring port and storage hub.

Commenting on the deal, Rosneft CEO Igor Sechin said: “This is a significant milestone for the company. Rosneft is entering one of the most promising and fast-growing world markets.”

Essar said the purchase gives Rosneft and the Trafigura consortium a strong foothold in the Indian market, which is expected to see growth in demand for petroleum products climb 5–7% in the next five years.

The deal was announced at the BRICS Summit in Goa, in the presence of India’s Prime Minister Narendra Modi and Russia’s President Vladimir Putin.

Essar said in a statement that the parties expect to obtain the relevant approvals from authorities before the end of the year.