OAO Rosneft has entered a preliminary agreement to purchase as much as 49% interest in Essar Energy PLC subsidiary Essar Oil Ltd., including its 20 million-tonne/year Vadinar refinery in Gujarat, India.
Signed by Shashi Ruia, founder of Essar, and Rosneft Pres. Igor Sechin on July 8, the agreement—which includes an interest in Essar Oil’s exploration and marketing businesses—remains contingent upon a variety of factors, including due diligence, determination of transaction price, execution of definitive transaction documents, and receipt of requisite approvals, Rosneft and Essar said.
Rosneft’s proposal to buy an ownership stake in Essar Oil follows a separate preliminary agreement for long-term crude supplies the companies signed in late 2014 (OGJ Online, Dec. 11, 2014).
Under the supply agreement, which the companies made final at the recent July 8 meeting, the Russian state-owned firm will deliver a total of 100 million tonnes of crude over a 10-year period to the Vadinar refinery.
Both deals come as part of a strategic alliance between the companies designed to boost India and Russia’s integrated cooperation in the hydrocarbon sector.