Russia’s Rosneft Acquires 98% In Essar Oil For $10.9 bn  

Benaulim (Goa): Russia's Rosneft and an investment consortium led by Trafigura on Saturday announced an agreement to acquire 98 percent stake in Essar Oil for $10.9 bn (Rs72,800 crore). The announcement came after a meeting between Prime Minister Narendra Modi and Russian President Vladimir Putin here.

Essar Energy Holdings Limited and Oil Bidco (Mauritius) Limited, companies incorporated and managed under the laws of Mauritius, the controlling shareholders of Essar Oil Ltd (EOL) have entered into separate definitive agreements for the sale of 98 percent of EOL to Rosneft Oil Company, one of the world’s largest petroleum companies with revenues in excess of $80 billion .

Shashi Ruia, Essar Chairman

It’s a historic day for Essar. The transaction demonstrates our ability to build world-class assets and create immense value in our businesses. The monetisation of our stake in Essar Oil will help drive the next level of growth for our other businesses.

The decision of billionaire brothers Shashi Ruia and Ravi Ruia to offload ‘family silver’ will enabled them to reduce the Group level debts of Rs 90,000 crore by significantly.

Essar Chairman Shashi Ruia said: "It is a historic day for Essar. The transaction demonstrates our ability to build world-class assets and create immense value in our businesses. The monetisation of our stake in Essar Oil will help drive the next level of growth for our other businesses."

Igor Sechin, CEO, Rosneft, said: “This is a significant milestone for the Company. Rosneft is entering one of the most promising and fast-growing world markets. At the same time, this project provides unique opportunities for synergies with the existing assets of the Company and is consistent with Rosneft's enhanced presence in the fast growing markets of other APR countries, such as Indonesia, Vietnam and The Philippines.”

Igor Sechin, CEO, Rosneft

This is a significant milestone for the Company. Rosneft is entering one of the most promising and fast-growing world markets. At the same time, this project provides unique opportunities for synergies with the existing assets of the Company and is consistent with Rosneft’s enhanced presence in the fast growing markets of other APR countries, such as Indonesia, Vietnam and The Philippines.

Rosneft, Essar Energy Holding and Oil Bidco have signed a pact to acquire 98 per cent stake in Essar Oil, and pay another $2 billion (Rs 13,300 cr) to buy Vadinar Port from the Indian industrial group.

"The all-cash deal encompasses Essar Oil's 20 million-tonne refinery in Gujarat, India, and its pan-India retail outlets. The closing of the transaction is conditional upon receiving requisite regulatory approvals and other customary conditions. The parties expect to obtain the relevant approvals before the end of this year," Essar Oil said.

The first sale and purchase agreement envisages the sale of 49 percent to Petrol Complex Pte. Ltd (a subsidiary of PJSC Rosneft Oil Company). The second envisages the sale of the remaining 49 percent to Kesani Enterprises Company Limited (owned by a consortium led by Trafigura) at an enterprise valuation of Rs 72,800 crore ($10.9 bn). An additional Rs 13,300 crore ($2 billion) will be paid for the acquisition of Vadinar Port, which has world-class storage and import/export facilities.

It is engaged mainly in oil and gas exploration and production, refining and product marketing in Russia and across countries in North America, Latin America, Europe, Asia and the Middle East. The first deal involves the sale of 49 per cent in Essar Oil to Petrol Complex, a subsidiary of Rosneft, while the second envisages the sale of the remaining 49 per cent to Kesani Enterprises, owned by a consortium led by Trafigura and United Capital Partners.

The first sale and purchase agreement envisages the sale of 49 percent to Petrol Complex Pte. Ltd (a subsidiary of PJSC Rosneft Oil Company). The second envisages the sale of the remaining 49 percent to Kesani Enterprises Company Limited (owned by a consortium led by Trafigura) at an enterprise valuation of Rs 72,800 crore ($10.9 bn). An additional Rs 13,300 crore ($2 billion) will be paid for the acquisition of Vadinar Port, which has world-class storage and import/export facilities.

"An additional $2 billion will be paid for the acquisition of Vadinar Port, which has world-class storage and import and export facilities," the company said. Trafigura is a leading independent commodity trading and logistics group with revenues of $100 billion. United Capital Partners (UCP) is a large independent Russian private investment group with investments of over $3.5 billion in various industrial sectors.