Trafigura, UCP and Rosneft acquire 98% stake in Essar Oil Limited

News | 21 August 2017

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On 21 August Rosneft acquired a 49.13% stake in Essar Oil Limited (EOL) from Essar Energy (part of Essar Group) and Oil Bidco, while a consortium made up of Trafigura and UCP Investment Group bought a further 49.13% stake in the Indian oil company.

The US$12.9mtransaction involves EOL’s Vadinar refinery in Gujarat, which has a capacity of 20 million tonnes per annum (MTPA), and is capable of processing heavy and ultra-heavy crudes while producing Euro IV and Euro V grade fuels.

The trio of investors will also acquire the Mumbai-based company’s Vadinar Port, all of its infrastructure assets, and over 3,500 retail service stations across India.

Igor Sechin, Rosneft’s chief executive officer, said, “The acquisition of the stake in the Vadinar refinery creates unique opportunities of synergies with existing Rosneft-owned assets and will help improve efficiency of supply to other countries within the region.

“Together with our partners we intend to support the company to significantly improve its financial performance and, in the medium term, adopt an asset development strategy.”

A new board of directors is being formed, made up of representatives from each new shareholder, as well as EOL’s management team and independent directors.

“I congratulate Rosneft, Trafigura and UCP for investing in a world-class oil business, which we are proud to have built,” said Shashi Ruia, founder of Essar.

“For Essar, the closure of this landmark transaction ushers in a new phase of growth across our portfolio of businesses that hold great promise in India’s enduring development story.”

Jeremy Weir, chief executive officer of Trafigura added, “Essar Oil will now be able to take advantage of the strengths of its international investors to further develop and enhance value to this world class asset.  Our stake in Essar Oil also complements Trafigura’s growing presence in India at a time when the country’s economic outlook is positive.”

Rosneft is the largest oil producer in Russia and has a 50.075 stake in Bashneft, the second largest oil producer in the country. Glencore and Qatar acquired a 19.5% stake in Rosneft in 2016, while BP owns a separate 19.75% stake – the remaining 61% is controlled by the Russian state. 

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