Rosneft to Close $10 bn Essar Oil, Vadinar Refinery Deal in a Few Weeks


Russian oil major Rosneft on Wednesday said that the company will close $10.9 billion (Rs 72,800 crore) acquisition of Essar Oil and Vadinar refinery within a few weeks.

“We are closing the deal of Essar Oil and Vadinar refinery within a few weeks,” said a Rosneft official, president and chairman of Rosneft told the media on the sidelines of Petrotech Summit in New Delhi. This will include acquisition of Essar Oil’s 20 million tonne (MT) refinery in Gujarat and its retail outlets.

The Russian oil major is doing the acquisition in a consortium of oil trading firm Trafigura and private investment group United Capital Partners.  The consortium is set to pay an additional of $2 billion (Rs 13,300 crore) for the acquisition of Vadinar Port too. The deal, which will be the largest foreign direct investment in India till date, was announced in October this year.

“Our relationship with India has two aspects. Recently, oil companies like Indian Oil Corporation, Oil India and ONGC had acquired stakes in our Vankor and Tass-Yuryakh oil fields. Now, we are also closing in on the acquisition of Vadinar refinery, which is one of the top 10 refineries in the world,” the official added. The Indian companies will hold 29.9 per cent stake in Taas-Yuryakh oilfield in East Siberia for $1.12 billion and 23.9 per cent in the Vankor oilfield for $2.02 billion.

The Vankor deal is set to provide 6.56 million tonnes of oil equivalent (mmtoe); Taas-Yuryakh may feed 1.5 mmtoe by 2019 to the oil-starved India. He added that though no new deals are in the offing, his company will always be interested in partnering with Indian companies.

Beginning from January, Opec (Organization of the Petroleum Exporting Countries) is set to go for an output cut of 1.2 million barrels per day (bpd), while non-OPEC countries too are expected to reduce production by 6,00,000 bpd. Being the biggest non-OPEC producer, Russia committed to cut oil production by 3,00,000 bpd. Rosneft had earlier expressed dis-interest in cutting crude oilproduction but now it says, “The Russian Federation is the major shareholder in our company and we will act according to the way the major shareholder asks us to do.”

Russia-India pipeline to take Chinese route

In what may be a rapid twist in the relationship between arch rivals India and China, the world’s most expensive gas pipeline that India and Russia are planning may take the Chinese route.

According to an official close to the development, Gazprom and ONGC Videsh are in talks to bring the gas through the China route. The plan is that Russia may provide gas to China and in return, the existing pipeline between Myanmar and China can reverse its flow. “If both China and Myanmar agree to this, we will have a connector between India and Myanmar,” said  N K Verma, Managing Director of ONGC Videsh Ltd.

Both Engineers India Ltd and Gazprom PJSC are jointly preparing a blueprint for laying a gas pipeline. Both India and Russia had recently agreed to construct $25 billion natural gas pipeline from Siberia to India.  “Among the options like Himalayas, TAPI route and Iran route that we considered, the Chinese route appears to be the most favourable if all the countries agree to it,” Verma added.


Source: The Business Standard

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