By Nidhi Verma
| NEW DELHI
NEW DELHI A group led by Russian oil major Rosneft will acquire India's Essar Oil in a $12-$13 billion deal including debt, two sources privy to the deal said, giving the Kremlin access to the South Asian nation's growing fuel market.Russia is keen to develop and deepen its Soviet-era economic ties with India at a time when its own economy is stagnant, hit by Western sanctions and low oil prices.Rosneft will get 49 percent and the two investors -- European trader Trafigura and a Russian fund UCP -- will hold the remaining 49 percent in equal parts, they said, adding that the valuation included about $4.5 billion in assumed debt.No immediate comment was available from the companies involved. Essar Oil is part of a steel-to-ports conglomerate controlled by the billionaire Ruia brothers that has faced pressure from creditors to reduce borrowing that some analysts estimate at more than $14 billion.
One source said the deal will be funded by Russia's VTB Capital, part of state-controlled bank VTB. VTB Group is under Western sanctions over Russia's role in the Ukraine crisis that restrict its access to international capital.The Indian firm is expected to announce the deal on Saturday in the coastal resort of Goa during a visit by President Vladimir Putin, who will meet Indian Prime Minister Narendra Modi for a bilateral summit.Essar Oil operates a 400,000 barrel-per-day oil refinery on India's west coast and sells fuels through its 2,470 filling stations in India.
The deal will also include the Vadinar port and a power plant associated with the refinery, said one of the sources.Through this acquisition, Rosneft will not only get an additional outlet for its oil amid supply glut but will also get to market fuels in the world's fastest growing major economy.
The Russian company will be the third international player after Royal Dutch Shell and BP to enter the Indian fuel retailing market.India is replacing China as the driver of global oil demand growth as its economy expands and a rising middle class buys motor vehicles. The International Energy Agency expects India to account for a quarter of global energy use by 2040.Rosneft may supply Venezuelan oil to Essar's Vandinar refinery after a deal to buy a stake in the Indian company is finalised, the Indian company's managing director L. K. Gupta told Reuters in August. (Reporting by Nidhi Verma; Editing by Douglas Busvine/Keith Weir and Alexandra Hudson)
This story has not been edited by Firstpost staff and is generated by auto-feed.
First Published On : Oct 13, 2016 22:15 IST