Rosneft enters India with $13b Essar deal

AFP, MOSCOW: In a spectacularly costly gamble aimed at boosting Russia’s strategic position, state-controlled giant Rosneft is investing in India’s Essar Oil to muscle into a promising market with outlets throughout Asia.
Russian President Vladimir Putin returned from last week’s BRICS summit in Goa with one of the largest deals the oil sector has seen in the last two years of falling prices: 98 per cent of Essar Oil at a valuation of $12.9 billion.
Rosneft—Russia’s biggest oil company led by Putin’s close ally Igor Sechin—will buy 49 per cent of Essar Oil, which owns the Vadinar refinery in western India.
Vadinar is one of the country’s largest refineries and one of the world’s most modern, with access to a port navigable by the largest vessels.
Essar Oil operates 2,700 petrol stations and was controlled until now by billionaire brothers Shashi and Ravi Ruia.
A further 49 per cent will be acquired by a group of investors led by Trafigura oil traders, one of Rosneft’s partners.
“Rosneft is entering one of the most promising and fast-growing world markets,” Sechin said, according to a statement. Rosneft said the Vadinar refinery will allow it to process its crude oil produced in Venezuela, which is heavy and more difficult to refine.
It could also serve as a base for exporting to the Asia-Pacific region, including Indonesia, Vietnam, the Philippines and Australia.
While the deal represents an unprecedented foreign acquisition from the Indian perspective, for Russia it is “an important strategic victory,” said Emily Stromquist, an analyst at Eurasia Group.
“It sends a signal to the EU and US that Russia has alternative market opportunities despite sanctions” imposed over Russia’s actions in Ukraine, she wrote in a note. “It also provides a much-needed opportunity for export diversification as European demand flattens and Chinese growth becomes more unpredictable.”
With its 1.2 billion inhabitants, India is the world’s fourth largest consumer of hydrocarbons, with demand constantly growing.

 

Rosneft enters India with $13b Essar deal

AFP, MOSCOW: In a spectacularly costly gamble aimed at boosting Russias strategic position, state-controlled giant Rosneft is investing in Indias Essar Oil to muscle into a promising market with outlets throughout Asia. Russian President Vladimir Putin returned from last weeks BRICS summit in Goa with one of the largest deals the oil sector has seen in the last two years of falling prices: 98 per cent of Essar Oil at a valuation of $12.9 billion. RosneftRussias biggest oil company led by Putins close ally Igor Sechinwill buy 49 per cent of Essar Oil, which owns the Vadinar refinery in western India. Vadinar is one of the countrys largest refineries and one of the worlds most modern, with access to a port navigable by the largest vessels. Essar Oil operates 2,700 petrol stations and was controlled until now by billionaire brothers Shashi and Ravi Ruia. A further 49 per cent will be acquired by a group of investors led by Trafigura oil traders, one of Rosnefts partners. Rosneft is entering one of the most promising and fast-growing world markets, Sechin said, according to a statement. Rosneft said the Vadinar refinery will allow it to process its crude oil produced in Venezuela, which is heavy and more difficult to refine. It could also serve as a base for exporting to the Asia-Pacific region, including Indonesia, Vietnam, the Philippines and Australia. While the deal represents an unprecedented foreign acquisition from the Indian perspective, for Russia it is an important strategic victory, said Emily Stromquist, an analyst at Eurasia Group. It sends a signal to the EU and US that Russia has alternative market opportunities despite sanctions imposed over Russias actions in Ukraine, she wrote in a note. It also provides a much-needed opportunity for export diversification as European demand flattens and Chinese growth becomes more unpredictable. With its 1.2 billion inhabitants, India is the worlds fourth largest consumer of hydrocarbons, with demand constantly growing.