The Chairman of Rosneft’s Management Board, Igor Sechin, and Essar Group Founder, Shashi Ruia, have signed a long term contract for the supply of oil to Essar’s Vadinar refinery in Guajarat, India. The document was signed in Ufa during the BRICS Summit, in continuation of the agreements reached in 2014 during Vladimir Putin’s visit to India.
As part of the new contract, Rosneft will supply 100 million t of crude oil over a period of 10 years. The company is expanding its market outlet and amplifying the volume of supplies to the region. As a result of this agreement, Rosneft has obtained a secure market outlet of crude oil, which will create additional possibilities of production planning and marketing.
In addition, Rosneft and Essar shareholders signed a Term Sheet with regard to Rosneft’s participation in the Vadinar refinery equity capital, with a share of up to 49%. The principles laid down in the Term Sheet will be reflected in the final documents, which will be subject to corporate approval. Rosneft’s participation in the refinery’s equity capital will allow the company to obtain a share in one of the biggest refineries in India and the Asia Pacific region; refining capacity at the Vadinar refinery is 20 million tpy. The parties intend to significantly increase the refinery’s capacity to 45 million tpy by 2020. The deal also includes a retail chain of 1600 stations located in India; the parties plan to increase the total quantity of retail sites to 5000 within the next two years.
The implementation of the terms of the signed document will increase the earning capacity of Rosneft’s operations in the region along the whole value chain and open new perspectives for the development of commercial activities in the Asia Pacific region.
“The reached agreements are of a strategic nature,” said Igor Sechin. “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 the 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”.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.hydrocarbonengineering.com/refining/09072015/rosneft-and-essar-expand-cooperation-1061/