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Rosneft, partners to announce acquisition of India’s Essar Oil completed

The consortium has picked up a former trading veteran from its shareholder BP to run Indian operations.

business Updated: Aug 20, 2017 23:29 IST
Reuters, New Delhi/Mumbai
Rosneft,Essar Oil,BP
An oil refinery of Essar Oil, which runs India's second biggest private sector refinery, in Vadinar, Gujarat, pictured in October 2016. (Reuters File Photo)

A consortium led by Russian oil major Rosneft will announce on Monday completion of a $12.9 billion deal to acquire Indian private refiner Essar Oil, strengthening ties between the world’s largest oil producer and the fastest growing fuel consumer.

Rosneft will get a 49 percent stake in Essar and the two investors, European trader Trafigura and a Russian fund UCP, will hold another 49 percent in equal parts. The purchase is the biggest foreign acquisition ever in India and Russia’s largest outbound deal.

The three jointly issued an invitation to reporters to a briefing “following the completion of the acquisition of Essar Oil Ltd” on Monday.

The consortium has picked up a former trading veteran from its shareholder BP to run Indian operations.

Tony Fountain, who was chief executive for refining and marketing at Indian conglomerate Reliance Industries Ltd from January 2012 to February 2016, will be non-executive chairman of the merged entity, three sources said. Fountain did not comment on his appointment.

The deal helps Russia to deepen economic ties that stretch back to the Soviet era.

Essar Oil operates a 400,000 barrel-per-day oil refinery in Vadinar on India’s west coast and sells fuels through its 3,000 retail stations in India. The deal also includes the Vadinar port and a power plant associated with the refinery.

The deal, initiated about two years ago, will help Rosneft in gaining access to India’s rising fuel retail market.

Rosneft and Trafigura are the latest international companies after Royal Dutch Shell and BP to enter the Indian fuel retailing market.

Rosneft may supply Venezuelan oil to Essar’s Vadinar refinery after a deal to buy a stake in the Indian company is finalised, the Indian company’s managing director LK Gupta told Reuters in August last year.

First Published: Aug 20, 2017 23:02 IST