Essar acquisition gives Rosneft foothold in Indian energy market

Essar: Russian oil giant Rosneft’s ambitions to secure a foothold in the Indian energy sector looks set to become a reality this week with the announcement that it is to buy a 49% stake in Essar Oil, the fully integrated oil and gas company owned by the billionaire Ruia brothers. A further 49% will go to European commodities trader Trafigura and Russian fund UCP in a deal worth between $12bn and $13bn, including debts estimated at about $4.5bn. Official confirmation of the deal is expected to be made to coincide with Russian President Vladimir Putin’s scheduled appearance at the BRICS summit in Goa tomorrow. 
Essar owns  a global portfolio of onshore and offshore oil and gas blocks, with about 35,000 sq km available for exploration and has a  global crude-refining capacity of 400,000 bpd. The company  also operates a network of over 2,100 retail outlets across India, with another 2,800 under various stages of commissioning.
India is the world’s fourth-largest energy consumer with oil and gas accounting for 37.3% of total energy consumption, but although the country has proven reserves of  5.6bn  barrels of  oil reserves and 1,330 bcm of gas, it remains heavily dependent on imports. Rosneft’s entry into the market comes with the active encouragement of the government which is hoping to reverse a trend which can only get worse wth  industrialisation and high population growth expected to see  annual oil and gas consumption increase at over 4% and 68% respectively. 
The deal will consequently  help India to secure Russian oil output as well as giving  Rosneft access to the Indian market, and follows on from last year’s sale of stakes in its Vankor and Taas-Yuriakh Siberian oil fields to a group of Indian oil companies. 

Source: reuters