rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Essar eyes 50% stake in Kenyan refinery

Essar eyes 50% stake in Kenyan refinery

December 10, 2007 14:10 IST
Indian conglomerate Essar group is understood to have initiated discussions for acquiring 50 per cent stake in a Kenyan refinery from international oil players as part of its move for a global footprint.

The refinery in Mombasa, in which the government of Kenya owns a 50 per cent stake, has an annual production capacity of about four million tonnes.

According to sources close to the development, Essar is looking to buy out the remaining 50 per cent stake held by three global energy giants -- Chevron, Royal Dutch and British Petroleum -- in Kenyan Refinery and Petroleum Ltd.

Essar is looking at this potential deal, the announcement for which is expected shortly, in pursuance with its worldwide expansion plans and it would further expand its presence in the African sub-continent.

The group already has three exploration and production blocks in Madagascar and one additional block in Nigeria.

When contacted, company officials from Mumbai said, "We continue to look for growth opportunity in sectors, where ever we are present. As a corporate policy we will not like to talk about any such proposal."

Essar has been scouting for refinery assets outside India for quite some time and has recently expressed its intention to expand its refining capacity to 10 lakh barrels per day, including three lakh barrels per day outside the country.

Essar Oil recently announced that its board has approved plans to expand the capacity at its Vadinar refinery from 10.5 million tonnes (2.2 lakh barrels per day) to 34 million tones per annum (seven lakh barrels per say) by 2010.

The expansion would be carried out at a cost of about $6 billion (Rs 24,000 crore), the company had said.  The expansion would be funded by an equity contribution of about $2 billion, to be raised through a preferential issue to promoters, while the remainder would be through debt.

The current installed capacity of Vadinar refinery is 10.5 million tonnes per annum made at an investment of about three billion dollars. It was commissioned in November 2006 and has been operating at about 7.5 million tonnes.

The promoters had previously thought of delisting Essar Oil from Indian bourses, but later said they no longer intended to proceed with the delisting. Essar Oil's assets include developmental rights in proven exploration blocks in India and abroad and has a marketing network of more than 1,250 oil retail stations across India, which it plans to double to 2,500 stations.

© Copyright 2014 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.