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Essar Oil Says Shell Refinery Deal to Take More Time

BLOOMBERG

By Rakteem Katakey and Francine Lacqua

Jan. 27 (Bloomberg) — Essar Oil Ltd., operator of India’s second-largest non-state refiner, said a deal to buy three refineries from Royal Dutch Shell Plc will take more time.

“It’s going to be a few more months before we have a clear decision on the transaction,” Prashant Ruia, chief executive officer of the Essar Group, said in an interview with Bloomberg TV at Davos in Switzerland today. “It’s a bit too early to talk about the value of the transaction.”

Essar and Reliance Industries Ltd., India’s biggest company by market value, are bidding for refineries in the U.S. and Europe as companies such as Shell and Valero Energy Plc sell unprofitable plants and cut expenses. Essar, which bought a 50 percent stake in Kenya Petroleum Refineries Ltd. in July, wants to add capacity in Europe to access markets and pipelines, a person familiar with the matter said in August.

Essar Oil shares declined 4 percent to 137.50 rupees at 1:25 p.m. in Mumbai trading, the lowest level since Dec. 23. The benchmark Sensitive Index fell 2.1 percent.

Essar and Shell have been in exclusive talks since Oct. 30. The three refineries Shell plans to sell have more than double Essar’s current capacity of 210,000 barrels a day, according to data compiled by Bloomberg.

The refinery at Stanlow, Britain’s second-largest processing plant, can process 233,000 barrels a day. Shell’s plant at Hamburg in Germany has a capacity of 110,000 barrels a day and the refinery at Heide can process 91,000 barrels.

To contact the reporters on this story: Rakteem Katakey in New Delhi at [email protected]; Francine Lacqua in Davos at [email protected].

Last Updated: January 27, 2010 03:32 EST

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