MOSCOW (MRC) -- Russia's top oil producer Rosneft is still carrying out due diligence to buy a stake in Essar Oil, according to the Indian group which runs India's second-biggest private sector refinery, said Hydrocarbonprocessing.
Rosneft signed a preliminary deal in July last year to acquire up to 49% in Essar Oil, controlled by the Indian billionaire Ruia brothers. "Rosneft is in advanced stage to conclude the due diligence process and it will still take some time before the deal is finally closed," Essar Oil Managing Director L.K. Gupta said on a media conference call after announcing quarterly results.
Gupta said the talks with Rosneft were exclusive, and that the company would not comment on "market rumors" on whether Essar Oil was in talks with other global oil and gas companies about further stake sales. Bloomberg recently eported that the company was in talks with Saudi Arabia's biggest oil company Saudi Aramco and National Iranian Oil Company to sell a stake in its refinery.
Essar, whose business interests include steel, oil and gas, power and ports, has been forced to consider selling assets to reduce its debt, after expanding in India and overseas. Essar Oil recently posted a seven-fold jump in net profit for the December quarter, its last quarter as a listed company on the Indian stock exchanges, to 3.64 billion rupees (USD54 million) helped by a near doubling of its gross refining margin.
The company, which is officially de-listed from Feb. 10, said its gross refining margin, an important gauge of profitability for an oil refiner, rose to USD13.25/bbl. Essar Oil, the top Indian buyer of Iranian crude, is yet to decide whether it will increase its imports from Tehran, Gupta said. "It depends on economic consideration... and whether the crude fits our basket."
Essar Oil currently owes USD2.5 billion to Iran, he said. The company imported 96% more oil from Iran in December compared with the preceding month, tanker arrival data made available to Reuters shows, buoyed by the prospects of a lifting of Western sanctions.
As MRC informed earlier, Rosneft, Pirelli S.p.A. and Synthos S.A. signed a Memorandum of Understanding with regard to performing a feasibility study in the area of R&D, production and supply of synthetic rubber in the city of Nakhodka within the framework of the FEPCO (Far East Petrochemical Company) petrochemical cluster.
Rosneft is currently buying competitor TNK-BP in deals worth USD55 billion that will create the largest listed oil producer in the world and will hand BP a 19.8% stake in the oil giant.
MRC