Essar seeks Indonesia, Aus resources to meet Indian demand

Essar Group is seeking to expand by acquiring more coal and iron ore assets in Indonesia, Australia and Africa to meet domestic Indian needs for resources, Chief Executive Officer Prashant Ruia said.

“We’re looking at investing overseas, including in Indonesia, Australia and Africa to access natural resources,” Ruia said in a Bloomberg Television interview at the World Economic Forum on East Asia in Jakarta. “Coal and iron ore are two major possibilities and, going forward, oil and gas.”

Indian companies including Essar, Tata Power Co Ltd and Reliance Power Ltd are expanding overseas to meet energy needs to support growth in Asia’s second-fastest growing major economy.

India, which imports about 75 per cent of its crude requirements, had its oil-import bill climb six-fold in the past decade to $85.5 billion for the year ended March as demand and prices rose, equivalent to about 7 per cent of gross domestic product.

Essar agreed last year to buy the Aries coal mines in Indonesia’s East Kalimantan province to secure supplies for its power plants, the Mumbai-based company said March 2010. The areas, which hold as much as 100 million metric tonnes of power-station coal, may start output within a year, Essar said.

“We believe Indonesian coal is a natural fit for India, for power generation in the country, because India is short in power requirements and the import of coal is only going to increase over time,” Ruia said.

Essar is also looking at development in oil and gas, power plants and coal-bed methane projects in Indonesia, he said.

Refining Capacity
The Essar Group, controlled by billionaire brothers Sashi and Ravi Ruia, is targeting 1 million barrels a day of oil processing capacity by expanding its Indian plant, operated by Essar Oil Ltd (ESOIL), and buying refineries in Europe and Africa.

Essar is completing acquiring Royal Dutch Shell Plc’s Stanlow refinery, which has a capacity of 12 million tonnes to 13 million tonnes and has a stake in a Kenya refinery, Ruia said.

Essar Oil purchased a 50 per cent stake in Kenya Petroleum Refineries Ltd from Shell, Chevron Corp and BP in 2009.

The Mombasa-based refinery has a capacity of 90,000 barrels a day, the permanent secretary in the Energy Ministry, Patrick Nyoike, said on April 2.

“The Chinese have been very active in Africa, lead by the government or government-led companies,” he said. Still “the continent is fast, the resources are fast, although the Chinese have got large assets, I don’t think all of the best are gone.”

Domestically, Essar aims to increase its refining capacity in India to 18 million to 20 million tonnes from 14 million to 15 million tonnes, Ruia said. Capacity will further be expanded to 36 million tonnes, he said, without providing a time frame.