Rosneft, Trafigura sign pact for picking 98% in Essar oil

Russian oil giant Rosneft and Netherlands-based Trafigura Group has acquired 98 per cent stake of India's second largest oil refinery Essar Oil Limited on Saturday in all cash deal at an enterprise valuation of Rs 72,800 crore ($10.9 billion).

An additional Rs 13,300 crore ($2 billion) will be aid for the acquisition of Vadinar Port, which has world-class storage and import/export facilities.

The business transaction was announced in the august presence of Prime Minister Narendra Modi and Russian President Vladimir Putin at the BRICS Summit in Goa.

The first sale and purchase agreement sees the sale of 49 per cent to Petrol Complex Pte. Ltd — a subsidiary of PJSC Rosneft Oil Company and the second envisages the sale of the remaining 49 per cent to Kesani Enterprises Company Limited owned by a consortium led by Trafigura and United Capital Partners.

"It is a historic day for Essar. 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," said Shashi Ruia, chairman of Essar Group.

Rosneft Oil Company is the world's largest petroleum company with revenues in excess of $80 billion. The Company's main business activities include exploration & production, refining and product marketing in Russia and across countries in North America, Latin America, Europe, Asia and the Middle East.

Prashant Ruia, Director, and Essar, said, "We have once again reinforced our unique expertise in project incubation, execution, value creation and monetization. We have established world-class assets that have attracted the attention of leading global companies and investors. The deals we have done have led to an FDI infusion of more than $30 billion into India."

Igor Sechin, CEO, Rosneft, said: "This is a milestone for the company. Rosneft is entering one of the most promising and fast-growing world markets. At the same time, this project provides unique opportunities for synergies with the existing assets of the company and is consistent with Rosneft's enhanced presence in the fast growing markets of other APR countries, such as Indonesia, Vietnam and The Philippines."

Trafigura Group is one of the world's leading independent commodity trading and logistics group of companies with revenues of approximately $100 billion. United Capital Partners (UCP) is a large independent Russian private investment group with investments of over $3.5 billion in various industrial sectors.

Jeremy Weir, chief executive officer of Trafigura, said, "This is an important and exciting investment. Essar Oil occupies a strategic position in the global oil market and owns world-class refining and infrastructure assets that will create multiple synergies with our trading business."