The Hindu Business Line : Essar Oil to hive off E&P biz into wholly-owned arm

A decision to this effect was taken by the company's board of directors, subject to various approvals required for the purpose, and the approval of the members by postal ballot.

The move by Essar to build up its E&P activities under the umbrella of a separate entity is expected to make it easier to raise funds. Currently, Essar Oil is unable give the desired attention to its exploration activities as it is taken up with the completion of its Vadinar refinery.

"To provide more focus and impetus to the exploration and production division, it is proposed to transfer this division to a wholly owned subsidiary which will continue to be a part of Essar Oil, subject to all approvals," said a company spokesman.

Essar has two onshore fields, two offshore fields and two coal-bed methane (CBM) fields. The onshore blocks are in Cachar (Assam) and Myanmar while the offshore blocks are in the Ratna R Series (proven block) and Myanmar. The CBM blocks are in Mehsana (Gujarat) and Raniganj (West Bengal).

The plan, according to company sources, is to "better leverage these assets."

With the company claiming 67 per cent completion of work at the Vadinar refinery and having spent some Rs 6,800 crore, against the estimated Rs 9,863 crore, Essar Oil may not be averse to having easy access to funds by way of the new subsidiary, said an analyst.

Essar Oil has also intimated stock exchanges that it will seek approval of the members at the ensuing annual general meeting for issue of FCCBs/GDRs/ADRs or other convertible financial instruments outside India on preferential issue basis for an amount not exceeding $300 million.

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