Rosneft-led consortium acquires Essar Oil for $12.9bn

A consortium led by Russian oil and gas company Rosneft, along with Trafigura and UCP Investment Group, has acquired Indian refiner Essar Oil (EOL) in a deal valued at $12.9bn.

Under the deal, Rosneft, through its subsidiary Petrol Complex, will receive a 49.13% stake in EOL, while the Trafigura-UCP consortium will acquire another 49.13% interest via Kesani Enterprises.

Together, the companies will control 98.26% of EOL, with the remaining 1.74% stake held by retail shareholders.

The acquisition of interest in the exploration, production and refining company is expected to open a new channel for international trading, with prospects to enter the markets of the Asia-Pacific region and South East Asia.

Rosneft CEO Igor Sechin said: “Together with our partners we intend to support the company to significantly improve its financial performance and, in the medium term, adopt an asset development strategy.

“The closing of the deal is a remarkable achievement for Rosneft too: the company has entered the high-potential and fast-growing Asia Pacific market.”

Rosneft will also acquire stake in Essar Oil's 20 million tonnes per annum, 400,000 barrel-per-day oil refinery in Vadinar.

The acquisition of related infrastructure, including a deep-water port, storage terminals and power station in combination with Rosneft’s upstream projects in Venezuela and working offtake contracts with PDVSA is expected to provide operational synergies to the company.

Sechin further added: “The acquisition of the stake in the Vadinar refinery creates unique opportunities of synergies with existing Rosneft-owned assets and will help improve efficiency of supply to other countries within the region.”  

In addition, the transaction comprises EOL’s pan-India retail network of more than 3,500 fuel stations, which, when seen with increasing demand for oil products in the country, is expected to provide Rosneft with a steady sales channel.

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Image: Officials representing Essar Group at the event held to announce the deal. Photo: courtesy of Essar.