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Essar’s Shell acquisition may cost $1.2 billion

Business Standard (India)

Nevin John / Mumbai December 10, 2009, 0:48 IST

Ruias-controlled Essar Oil (EOL) is looking to seal a deal with Royal Dutch Shell at $1-1.2 billion (between Rs 4,670 and 5,600 crore) for acquiring the global petroleum giant’s three refineries in Europe. EOL has presented its valuation of assets to the Shell management and the negotiations are on verge of completion, said banking sources close to the development.

A team of Essar Oil is in London, discussing the issues related to integration of assets. Group chief executive Prashant Ruia, son of chairman Shashi Ruia, has already completed the a few rounds of talks with Shell management, said company sources.

Essar Group is looking to acquire the assets in an all-cash transaction. “The company has already received financial commitments from global banks to fund the acquisition,” said the sources. Standard Chartered is believed to be the lead arranger of funds.

A spokesperson of EOL said, “We are in exclusive discussions with Shell and it is not our policy to comment on our negotiations and timelines.”

The Hamburg unit has a capacity to process 110,000 (bpd) of crude oil (5.5 million tonne a year), while Heide has a capacity of 91,000 bpd (4.55 million tonne). Stanlow, Britain’s second-largest refinery, can process 233,000 bpd (11.65 million tonne).

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