Kpmg Wants Essar To Sell Rig Unit To Egyptian Drilling

Consultancy company KPMG has suggested that Essar Oil sell its rigs division to Egyptian Drilling company (EDC) for a sum of $64 million (Rs 300 crore).

Essar Oil had mandated KPMG to find a buyer for the rigs. KPMG had kicked off the process by floating tenders in May 2001.

Four companies are said to have evinced interest. These were EDC, the Great Eastern Shipping company, MB Petroleum and Stena Drilling.

Final bids were however submitted only by Great Eastern Shipping and EDC. Stena declined to participate further in the bidding process, while MB Petroleum did not submit a final binding price bid.

EDC put in the winning bid, but pulled out of the deal at the last moment. A team from KPMG and Essar Oil one side and an EDC team met in London on July 5 and 6 to finalise the sale purchase agreement and commercial terms of the transaction.

In fact, Essar Oil had even sounded out the institutions on the proposed sale to get their approval.

Highly-placed institutional sources told Business Standard, "The institutions had even given the nod for the deal but at the last moment the deal fell through as EDC walked out of the deal." The precise reason for EDC walking out of the deal could not be ascertained.

An Essar spokesman said, "We are yet to finalise a buyer for the rigs division". He declined to elaborate further.

EDC is a 50:50 joint venture between the Egyptian government and the A P Moller group of Denmark, which runs one of the world's largest shipping lines, Maersk.

The rigs of Essar Oil have been deployed in Saudi Arabia, Oman, Qatar apart from ONGC's operations in Bihar.