Essar Oil-Rosneft Deal May See Russian Major’s Entry Into Petro Retailing In India

Essar Oil-Rosneft Deal May See Russian Major’s Entry Into Petro Retailing In India

The Essar Oil deal with Rosneft to sell a 49% stake in the company is a win-win for both companies. The deal will not only give the Russian oil major—Rosneft an opportunity to enter India’s refining sector but also open the gates to joint marketing of petroleum products through the 2000 odd petrol pumps of Essar Oil across the country.

There are 1,910 Essar-branded oil retail outlets in various parts of India with another 2,186 under various stages of implementation.

Alongside, the deal may mark Essar Oil’s foray into Siberian oil and gas fields as it may get to venture along with Rosneft into various Exploration and Production projects as also producing fields that the Russian Oil major has with it. Rosneft is also embarking on and implementing a number of projects in Venezuela, Brazil, USA, Canada, UAE, Algeria, Norway, Kazakhstan, Vietnam and Abkhazia.

Essar-RosneftLike Rosneft, Essar Oil is a fully integrated oil & gas company scale with strong presence across the hydrocarbon value chain from exploration & production to refining and oil retail.

Locational Advantages and Essar Oil’s Integrated Infrastructure Around Vadinar:

• All Weather Deep Draft Port
• Power & Steam Generation Facilities
• Product Evacuation Facilities by rail, road, sea & pipelines
• 2400 hectares Land

Essar Oil owns India’s second largest single site refinery having a capacity of 20 million tonnes and complexity of 11.8, which is amongst the highest globally. It has a portfolio of onshore and offshore oil & gas blocks with about 1.7 billion barrels of oil equivalent in reserves & resources.

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What’s In-Store for Rosneft at Essar Oil

§ Essar Oil’s 20 MMTPA Vadinar Refinery is India’s second largest single location refinery, constitutes 10% of Indian Refinery Capacity.
§ One of the most complex refineries in the world with the complexity of 11.8, capable of processing of high proportion of ultra heavy crudes & producing high quality (Euro IV & V) products . § Commenced commercial production of 10.5 mmtpa refinery in May,08 with complexity of 6.1 & completed Expansion Projects in June,12 with capacity of 20 mmtpa & complexity of 11.8.
§ Consistently operating at more than 100% since May, 08
§ Maintained excellent safety track record with achievement of 2,868 Loss Time Injury (LTI) free man days as of 8 th Feb,16.
§ Refined petroleum products are marketed through PSUs, direct Industrial customers & ~ 1910 operational retail outlets.
§ Deregulation of Gasoil & Gasoline provided great opportunity to capitalize on existing outlets and expansion of retail business

For the quarter ended December 2015, the company exhibited sound performance. In the quarter ended 31st December 2015, the refinery successfully completed its planned turnaround shutdown on 15th October 2015.

During the shutdown the company undertook the routine inspection and maintenance and converted VGO-HT unit into a mild Hydrocracker unit to enable the refinery to convert the entire VGO (Vacuum Gas Oil) into higher margin products. Also, the company modified crude blend window to enable the refinery to process higher quantity of ultra-heavy and high acidic crudes.

“Essar Oil has delivered excellent performance despite very challenging domestic and global macro-economic environment. The safe and successful completion of the turnaround shutdown of the refinery before schedule along with completion of the Diesel Maximisation Project will help us to sustain our excellent all round performance in future. We have generated a vibrant momentum in expanding our retail network as well as leveraging the potential of our existing network,” said Lalit Kumar Gupta, Managing Director and Chief Executive Officer, Essar Oil.

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Rosneft is the leader of Russia’s petroleum industry and the world’s largest publicly traded petroleum company. The Company’s activities include hydrocarbon exploration & production, upstream offshore projects, hydrocarbon refining, and crude oil, gas and product marketing in Russia and abroad.

The Company is included in the list of strategic companies and organisations of Russia. The main Company shareholder (69.50%) is OJSC ROSNEFTEGAZ, a 100% state-owned company. BP owns another 19.75%, and the remaining 10.75% of the shares are publicly traded.

Rosneft conducts its exploration & production activities in all key hydrocarbon provinces of Russia, including West Siberia, Southern and Central Russia, Timan-Pechora, East Siberia, Far East and the Russian continental shelf, including the Arctic region.