India’s Essar Group Monday announced closure of $12.9 billion deal to sell its refining arm Essar Oil to a consortium led by Russian oil major Rosneft, boosting ties between the world’s top oil producer and the fastest growing fuel consumer.
The purchase is the biggest foreign acquisition ever in India and Russia’s largest outbound deal. It helps Russia deepen economic ties with India that stretch back to the Soviet era.
Rosneft will get a 49.13 percent stake in Essar Oil and the two investors, European trader Trafigura and a Russian fund UCP, will hold a similar stake in equal parts, Essar group said in a statement. The rest will be held by retail investors.
India’s Essar Oil plans to double the throughput of its refinery and create a petrochemical facility in the long-term, a Rosneft’s spokesman told Reuters in emailed comments on Monday.
Spokesman for Rosneft, which bought a 49 percent stake in Essar Oil, also said that Essar will increase the number of filling stations to 5,500 from current 3,500 stations in the medium term.
The deal will give Rosneft and its partners control over the 400,000 barrels per day Vadinar refinery in India.
The deal also reduces some of the pressure on Essar, which is controlled by the billionaire Ruia brothers. The group with presence in oil and gas, steel, ports and power, has been under pressure to reduce its debt burden. Read More…