The Hindu Business Line : Essar Oil scouting for overseas opportunities in auto fuel retailing

Kolkata, April 27 Having announced plans to expand its Vadinar refinery from 10.5 million tonnes to 34 mt by 2010, Essar Oil is scouting for acquisition of retail marketing and distribution assets abroad.

“To find a permanent home for our products, we are aggressively looking for distribution and marketing opportunities abroad,” the Essar Oil Managing Director, Mr Naresh Nayyar, told Business Line in an interview. The company is expecting to firm up deals in this regard in 2008-09.

It may be mentioned that Essar had previously created a retail market place for its products in India. However, the plan did not take off due to the Government’s policies to keep the retail market prices of auto fuels at artificially low levels vis-À-vis crude price volatility.

Essar’s 1,215-strong retail outlet business in India is currently in “maintenance mode” and is incurring a loss of $10 million annually.

According to Mr Nayyar, taking advantage of the demand-supply gap in diesel and LPG in the country, Essar currently sells its entire production to public sector marketing companies. However, most of its petrol and furnace oil production are exported.

He did not disclose the possible overseas markets the company was looking at.“Economics of supply logistics will play a crucial role in our search,” Mr Nayyar said.

Meanwhile, Essar is waiting for the Kenyan Government’s approval – which owns 50 per cent in the refinery and has a first right of refusal – for acquiring the residual 50 per cent stake in Kenya Petroleum Refineries from Shell Petroleum Company, Chevron Global Energy Inc and BP Africa.

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