Essar unit buys 50% stake in Kenyan refinery

Essar Energy Overseas, a subsidiary of Essar Oil, has entered into an agreement to acquire 50% stake in Kenya Petroleum Refineries (KPRL), a four million metric tonne per annum (MMTPA) refinery, in Mombasa, Kenya.

The government of Kenya holds the remaining 50% in KPRL. The company has not disclosed financial details of the deal.

This will be Essar Oil's first international acquisition in the refining sector.

Essar already has three exploration and production blocks in Madagascar and one in Nigeria.

The Mombasa refinery is planned to be upgraded by adding secondary units at a cost of $400- 450 million. The government of Kenya and Essar Energy Overseas will share the cost of upgrading the refinery.

Essar will acquire the KRPL stake from existing shareholders - The Shell Petroleum Company, Chevron Global Energy Inc and BP Africa.  Subject to certain conditions, the acquisition is expected to be completed in early  2008. 

Naresh Nayyar, chief executive officer, Essar Energy Holdings, said: "We are very pleased that our first refinery acquisition outside of India will be made in Kenya.  We look forward to working with the government of Kenya to develop KPRL further to supply the growing Kenyan and adjacent markets and finalise the upgrade project."