Essar group has signed a non-binding Term Sheet with Russian oil and gas major Rosneft to explore the possibility of the Russian company investing in Essar oil with a share of up to 49% of equity, the Indian company said.
It also said that OJSC Rosneft Oil Company (‘Rosneft’) will supply Essar Oil will crude oil for the next 10 years. This contract has been signed in pursuance to the Key Terms executed between the two companies in Dec’14 at New Delhi.
The contract will ensure supplies of 10 Million Tons per annum of crude oil and feedstock to Essar’s Vadinar refinery over a period of 10 years. Adequate operational flexibility is provided for the refinery to benefit from the international oil market opportunities.
“Essar Oil operates the second largest single location refinery in India and has a large requirement of crude oil that has to be primarily met by imports,” the Indian company said.
“This Long Term Crude Oil Supply Agreement with a large integrated oil company like Rosneft will help Essar Oil to diversify its supply sources, expand geographical market coverage and enhance supply security.”
The proposed transaction involving investing in Essar Oil is conditional upon various factors such as due diligence, determination of the transaction price, execution of definitive transaction documents and receipt of requisite approvals, the companies said.
Appropriate disclosures shall be made in accordance with applicable law as and when any definitive steps in relation to the aforesaid are undertaken, the Indian company said.
Essar Oil is a fully integrated oil & gas company of international scale with strong presence across the hydrocarbon value chain from exploration & production to refining and oil retail.
Essar Oil owns India’s second largest single site refinery having a capacity of 20 MMTPA and complexity of 11.8, which is amongst the highest globally. It has a portfolio of onshore and offshore oil & gas blocks with about 1.7 billion barrels of oil equivalent in reserves & resources. There are about 1,500 Essar-branded oil retail outlets in various parts of India, with another 1,500 in various stages of implementation.