India based Essar Oil has signed an agreement to sell its 49% stake for Vadinar refinery in Gujarat to Russian oil giant Rosneft.
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Additionally, the deal will ensure long-term crude supply to the refinery as Rosneft will supply 100 million tonnes of crude oil for the next ten years to be refined at the facility.
Financial details of the deal have not been disclosed, but is expected to range between $7bn to $8bn, reports The Economic Times.
The crude oil supply provision in the deal is in continuation of the agreements reached between Russia and India in 2014.
The facility, which is claimed to be one of the biggest refineries in India and Asia-Pacific region, has a refining capacity 20 million tonnes per annum.
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By GlobalDataUnder the terms of the agreement, Essar will also be responsible for operating a retail chain of 1600 stations across India, which is expected to promote the refining and marketing businesses for both the companies in the country.
Rosneft Management Board chairman Igor Sechin said: "The reached agreement is of a strategic nature.
"The performance of the terms of the signed documents will have a substantial impact on the scale of economical cooperation between Russia and India. The goods turnover between two countries will grow more than 50%.
"The new formula of integrated cooperation opens wide perspectives for the development of dialogue, both in specialised and related areas".
The deal is expected to diversify Essar Oil’s supply sources, expand geographical market coverage and reduce its dependence on crude oil imports, especially from Iran.
Image: Rosneft-Essar deal is expected to cost $7-8bn. Photo: courtesy of Host Photo agency
