Rosneft, Trafigura and UCP to buy India refiner for $12-$13 billion - sources | Reuters

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

Reuters October 13, 2016 22:15:05 IST
Rosneft, Trafigura and UCP to buy India refiner for $12-$13 billion - sources
| Reuters

Rosneft Trafigura and UCP to buy India refiner for 1213 billion  sources
 Reuters

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.

Updated Date:

also read

Netherlands vs Ireland, T20 World Cup 2021, Highlights: Ireland win by seven wickets
First Cricket News

Netherlands vs Ireland, T20 World Cup 2021, Highlights: Ireland win by seven wickets

Catch the live score and updates from the T20 World Cup 2021 match between Netherlands and Ireland

T20 World Cup 2021: Ryan ten Doeschate announces international retirement after Netherlands’ exit
First Cricket News

T20 World Cup 2021: Ryan ten Doeschate announces international retirement after Netherlands’ exit

KNCB said ten Doeschate has played his final international cricket match and thanked him "for everything he has done for the sport, in the Netherlands and abroad".

Shredded Banksy artwork, 'Love is in the Bin', could fetch millions at auction
World

Shredded Banksy artwork, 'Love is in the Bin', could fetch millions at auction

“Love is in the Bin” is being offered by Sotheby’s in London, with a presale estimate of $5.5 million to $8.2 million