essar oil rosneft deal $12.9 billion brics summit 2016 russia oil and gas ruia prashant debt
Storage tanks of an oil refinery of Essar Oil, which runs India's second biggest private sector refinery, are pictured in Vadinar in the western state of Gujarat, India, October 4, 2016Reuters file

Essar Oil, a fully integrated oil & gas company based out of Gujarat, India has signed a landmark deal to sell 98 percent stake to a group of investors for about $12.9 billion (approx. Rs. 85,000 crore).

Among the buyers are Russia's Rosneft and two other firms, commodity trading firm Trafigura and private investment group United Capital Partners.

The three buyers will pay about $3.5 billion each, reported Reuters on Saturday.

Igor Sechin, chief executive, Rosneft, was quoted as saying by the agency that a refinery and port owned by Essar Oil were worth around $10 billion and $2.9 billion, respectively.

The deal closure will be subject to requisite statutory approvals. The stake sale will enable the Essar Group to slash its huge debt, estimated at about Rs. 88,000 crore. 

Essar Oil owns India's second largest single site refinery at Vadinar, Gujarat, with a capacity of 20 MMTPA, or 405,000 barrels per day.

The company has about 2,500 Essar-branded oil retail outlets across India, in addition to the 2,600 that are in various stages of commissioning, according to the company's website.

Besides, the company has onshore and offshore oil & gas blocks with about 1.7 billion barrels of oil equivalent in reserves and resources.

The company is led by Prashant S Ruia. The Essar Group has presence in steel and ports, in addition to oil and gas.

The deal announcement comes even as Russian President Vladimir Putin is in Goa, India, to attend the 8th Brics Summit being attended by the heads of government of the member countries comprising Brazil, China, India and South Africa, besides Russia.

Prime Minister Narendra Modi is attending the summit where the member countries are discussing a host of issues, including terrorism and trade.

Earlier, Nirmal Sitharaman, India's minister for commerce and industry, held talks with her counterparts on Friday in New Delhi.