Rosneft finalises its deal with India’s Essar Oil

ROSNEFT and partners, including Trafigura Group, finalised their $12.9 billion (R169.48bn) purchase of India’s Essar Oil.

It took more than 10 months to complete the deal after it was announced last October, and more than two years after Rosneft first confirmed that it was in talks to buy India’s second-largest private oil refiner.

The purchase gives Russia’s biggest oil producer and one of the world’s largest commodity traders access to a global demand centre in Asia, while helping Essar Group reduce its debt by about $11bn and shift focus to its struggling steel business.

Essar Group sold 49 percent of Essar Oil each to Rosneft and a consortium of Trafigura and United Capital Partners, the Indian conglomerate said.

The closing of the acquisition enables Rosneft to enter one of the world’s fastest growing markets, the Russian company said.

South Asia outlet

Essar will sell its refinery at Vadinar on India’s west coast and its fuel-retailing business along with a port terminal and power plant that helps feed the refinery.

The deal for the 400 000-barrel-a-day refinery will give Russia’s biggest oil producer an outlet in south Asia for its production as oil-rich countries vie for market share.

Rosneft first confirmed that it was buying a stake in the Essar refinery in July 2015. More suitors later entered the fray as Essar was said to be in talks with the national oil companies of Saudi Arabia and Iran to sell a stake in its refinery business. It took several months to secure approvals for the deal.