Russias largest oil company Moscow-based Rosneft has acquired the state-owned stake, 50.08 percent, of another major Russian oil producer Bashneft for 329.6 billion rubles (about $5.3 billion). Then, this past Saturday, Rosneft announced it had acquired a 49% stake in India's second biggest private oil firm Essar Oil.
Rosneft's majority stake purchase in Bashneft from the state for some $5.3 billion was the latest part of the Kremlin's drive to raise much-needed cash. The Bashneft deal was expected to be closed by October 15.
"Under the Government of the Russian Federation Decree dated October 10, 2016 Rosneft carried out necessary corporate actions to prepare for and execute the acquisition of the Governments stake in Bashneft Public Joint Stock Company representing 50.0755% of its charter capital. The Company Board of Directors unanimously approved Rosnefts potential entry into Bashneft equity. In accordance with the BoD resolution Igor Sechin, Rosneft Chief Executive Officer, signed the Sale and Purchase Agreement of 88 951 379 Bashneft shares for RUB 329.69 billion", Rosneft said in a press release.
Bashneft is headquartered in Ufa, the capital of Bashkortostan Republic, Its Novo-Ufa refinery has an API Group I base oil plant with capacity to produce up to 220,000 tons per year and a lubricant blending plant. Rosneft operates a 200,000 tons per year Group I plant in Angarsk and another 200,000 tons per year plant in Novo-Kuibyshev.
Then this past Saturday Rosneft and its partners took over India's second biggest private oil firm Essar Oil in an all-cash deal valued at about $13 billion. Rosneft bought a 49 per cent stake in Essar Oil's refinery port and petrol pumps, while Netherlands-based Trafigura Group Pte, one of the world's biggest commodity trading companies, and Russian investment fund United Capital Partners split another 49 per cent equity equally. The remaining 2 per cent is held by minority shareholders after delisting of Essar Oil.
The all cash deal is expected to close in the fourth quarter of 2016 or first quarter of 2017
The deal has an enterprise value of close to $13 billion, which includes Essar Oil's debt of $4.5 billion and about $2 billion debt with the port company and power plant. The near $3 billion dues to Iran for past oil purchases will remain on Essar Oil books.
Essar Oil, part of a conglomerate controlled by the billionaire Ruia brothers, operates a 405,000-barrels-a-day refinery at Vadinar in Gujarat.
Essar Oil said it has signed two agreements for the sale. "The first sale and purchase agreement envisages the sale of 49% to Petrol Complex Pte Ltd (a subsidiary of PJSC Rosneft Oil Company); the second envisages the sale of the remaining 49 per cent to Kesani Enterprises Company Limited (owned by a consortium led by Trafigura and United Capital Partners) at an enterprise valuation of Rs 72,800 crore ($10.9 billion).
"An additional Rs 13,300 crore ($2 billion) will be paid for the acquisition of Vadinar Port, which has world-class storage and import/export facilities," it said.
