Rosneft led Consortium Buys Indian Essar Oil for $13bn

Rosneft and a consortium of international investors October 15 agreed to buy 98% stake in Indian private sector firm, Essar Oil, for $12.9bn. Of that, $10.9bn are for Essar Oil’s refining and retail assets, and $2bn for Vadinar port and related infrastructure.

The first sale and purchase agreement envisages the sale of 49% to Petrol Complex, a subsidiary of Rosneft; the second envisages the sale of the remaining 49% to Kesani Enterprises Company, which is owned by a consortium led by trader Trafigura at an enterprise valuation of $10.9bn.

An additional $2bn will be paid for the acquisition of Vadinar Port, which has storage and import/export facilities. The remaining 2% stake will be held by promoters of Essar Oil. 

Vadinar refinery's throughput capacity is 20mn mt/yr, making it the second biggest in India. Essar’s business also includes a vast network of 2,700 branded retail outlets across India.

Essar Oil's Vadinar refinery (Credit: Essar Oil)

The acquisition will enable Rosneft to enter the high-opportunity Indian market and boost the positions of the trading arm of the company in the Asia Pacific region, the Russian company said.

“Rosneft is entering one of the most promising and fast-growing world markets. At the same time, this project provides unique opportunities for synergies both with the existing assets of the company and Rosneft's future projects, and opens a big potential for expansion of its presence on the markets of other APR countries, such as Indonesia, Vietnam, the Philippines and Australia,” CEO Igor Sechin said.

Shardul Sharma