A consortium led by Russian oil major Rosneft plans to finally complete its $12.9 billion acquisition of India's Essar Oil next month, two Russian sources close to the deal told Reuters.
Acquiring the refiner will give state-owned oil Rosneft access to India, one of the world's fastest-growing energy markets. The deal was announced to fanfare in October but has still not closed.
The sources said the delay was due to the complexity of Essar's structure and financing, not to any issues relating to the buyers, who will buy 98 per cent of Essar. Rosneft is under Western sanctions due to Moscow's role in the Ukraine crisis.
The deal, announced during a visit to India by Russian President Vladimir Putin, is now set to be completed on March 15, the two sources said.
Rosneft will acquire a 49 per cent share in Essar and another 49 per cent will be shared between commodities trader Trafigura and Russian private investment group United Capital Partners (UCP).
The deal was structured to avoid the risk of Western sanctions, the chief executive of Russian bank VTB, which is involved in financing the deal, told Reuters last year.
Essar Oil operates a 400,000 barrel-a-day refinery in Vadinar on India's west coast and sells fuels through its 2,470 filling stations across the country.
Trafigura has said that VTB would co-fund Trafigura and UCP's 49 per cent stake. Rosneft has said it may use its own funds, external financing or both to pay for its share.
One of the sources close to the deal said discussions about the management team at Essar were holding up completion of the deal, but did not elaborate.
The second source said that Essar's Indian creditor banks, who include State Bank of India (SBI), must approve a change of control at the company. The deal was also complicated by Essar's ongoing debt restructuring programme, the source said.
"The process of receiving lender approvals, including SBI, for the transaction is underway. Sanctions provisions do not apply to the transaction," Essar said in emailed comments to Reuters.
A senior SBI official said the bank was on course to approve the deal, and did not see U.S. sanctions getting in the way, but did not give a timeframe.
VTB earlier agreed to provide Essar with up to $3.9 billion for debt reconstruction.
In response to Reuters queries, Rosneft said it expected to close the deal in the first quarter of 2017. Trafigura gave the same timeframe, and said it was also replying on behalf of UCP.