Russian oil group Rosneft has reached a preliminary agreement with Indian private energy group Essar, on the acquisition by Rosneft of a 49% stake in Essar Oil. The parties intend to sign and close the transaction by the end of June 2016 upon obtaining all necessary permits. In addition an agreement on crude oil deliveries to commence this year has also been achieved.
Essar Oil operates the second largest refinery in India, the 20 Mt/year Vadinar Refinery, and plans to implement a modernisation programme to expand the refinery’s capacity up to 25 Mt/year, including production of 1 Mt/year of propylene and polypropylene. Essar Oil Limited also owns 2,000 fuelling stations in India and plans to expand its network up to 5,000 stations.
In addition, Rosneft has signed agreements with other Indian oil companies, ONGC Videsh Ltd (OVL) and a consortium of IOC, Oil India Ltd (OIL) and a unit of Bharat Petroleum Corp Ltd (BPCL) for the sale of stakes in two Russian oilfields in Siberia for an estimated US$4.2bn cost. OVL, which purchased a 15% stake in the Vankor oil field for US$1.26bn in September 2015, signed an agreement to raise its interest in the field to 26% for an additional US$925m. The IOC-OIL and BPCL consortium will acquire a 23.9% interest in the Vankor oil field for US$2bn and a 29.9% stake in the Tass-Yuriakh oil field for US$1.28bn, this field holds recoverable reserves of 137 Mt and produces 20,000 bbl/d (to increase to 100 kb/d in two years). Partners also signed a Memorandum of Understanding with Rosneft for a future acquisition of stakes in the Vankor cluster fields of Suzunskoye, Tagulskoye and Lodochnoye. Rosneft will retain a 50.1% stake in Vankor.