Russian Government-owned oil company Rosneft will acquire 49 per cent of Shashi Ruia’s Essar Oil, which besides owning the Vadinar refinery has interests in hydrocarbon exploration and production. A term-sheet pertaining to the deal was signed between the two companies during Prime Minister Narendra Modi’s visit to Ufa, Russia, for the BRICS Summit.
Through the deal, Rosneft will also get a stake in Essar Oil’s retail chain of 1,600 stations and the two companies plan to increase it to 5,000 within the next two years.
While neither company revealed the value of the deal, Rosneft said, “The principles laid down in the term sheet will be reflected in final documents which will be subject to corporate approval.”
Essar Oil is in the process of de-listing from the Indian stock markets.
Further, the two companies also signed a long-term contract for crude oil supplies. Rosneft will supply 100 million tonnes of crude oil over 10 years to Essar Oil.
In a statement Rosneft said, “The perspective Rosneft participation in the refinery’s equity capital will allow it to obtain a share in one of the biggest refineries in India and the Asia-Pacific region. The refining capacity of Vadinar is 20 million tonne per annum and the two parties intend to significantly increase the capacity to 45 million tonne per annum by 2020.”
“The agreements are of a strategic nature. The performance of the terms of the signed documents will have a substantial impact on the scale of economic cooperation between Russia and India,” said Igor Sechin, President and Chairman of the Management Board of Rosneft, in a statement.