Indian company, Essar Oil will sell 49% of its stake to Russian oil firm Rosneft for an undisclosed amount, the Ruia-owned firm said on Thursday.
Essar, which owns India's second biggest oil refinery, said it "signed a non-binding Term Sheet with regard to Rosneft's participation in the equity capital of Essar Oil Limited with a share of up to 49%."
The proposed transaction is conditional upon various factors such as due diligence, determination of the transaction price, execution of definitive transaction documents and receipt of requisite approvals, it said in a statement.
Not disclosing the price, Essar said "appropriate disclosures shall be made in accordance with applicable law as and when any definitive steps in relation to the aforesaid are undertaken."
Also, a Long Term Crude Oil Supply Agreement by the two firms in was signed in Ufa, Russia for import of 10 million tonnes a year of crude oil for a period of 10 years.
This contract has been signed in pursuance to the Key Terms executed between the two companies in December 2014 at New Delhi.
"Essar Oil operates the second largest single location refinery in India and has a large requirement of crude oil that has to be primarily met by imports. This Long Term Crude Oil Supply Agreement with a large integrated oil company like Rosneft will help Essar Oil to diversify its supply sources, expand geographical market coverage and enhance supply security," the statement said.
The contract will ensure supplies of 10 million tonnes per annum of crude oil and feedstock to Essar's Vadinar refinery over a period of 10 years. "Adequate operational flexibility is provided for the refinery to benefit from the international oil market opportunities," it said.
Prashant Ruia, Chairman of Essar Oil hoped that the agreements will give a boost to increased cooperation in the hydrocarbon sector between India and Russia.