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Russia's Rosneft, partners to acquire controlling stake in India’s Essar Oil for $12.9bn

Published 17 October 2016

Russian oil major Rosneft and a consortium of commodities trader Trafigura and private investment group United Capital Partners have agreed to acquire 98% stake in India's Essar Oil (EOL) for around $12.9bn.

As per the terms of the deals, Rosneft’s subsidiary Petrol Complex will acquire 49% stake in Essar Oil while Trafigura and United Capital Partners will purchase the remaining 49% interest.

Essar Group chairman Shashi Ruia said: “The transaction demonstrates our unique ability to build world-class assets and create immense value in our businesses.

"The monetization of our stake in Essar Oil will help drive the next level of growth for our other businesses.”

While the Rosneft-led consortium will pay Rs 72,800 crore ($10.9 bn) for Essar Oil’s refining and retail assets, the additional Rs13,300 crore ($2bn) will be paid to acquire its Vadinar port.

Essar Oil owns a 20 million tonne oil refinery in Vadinar in the state of Gujarat which produces about 9% of India’s total refining output and and complemented by a network of around 2,700 operating retail outlets.

Rosneft expects the acquisition of stake in Essar to provide unique opportunities for synergies with the existing assets. The deal complies with its strategy to boost presence in the fast growing markets.

Trafigura CEO Jeremy Weir said: “Essar Oil occupies a strategic position in the global oil market. It owns world-class refining and infrastructure assets that will create multiple synergies with our trading business.

“Investing in Essar Oil also offers us a platform to extend our exposure to the growing domestic market in India.”

Scheduled to be completed by the end of 2016, the agreements are subject to anti-trust and other regulatory clearances.

Image: The Essar Oil’s Vadinar refinery in Gujarat, India. Photo: courtesy of Abhisek Sarda/Wikipedia.