This Oil Giant Just Pulled Off India’s Largest Foreign Investment Ever

I wrote late last year about an unusual trend emerging in oil and gas M&A. Namely, a wave of outgoing global investment from E&P firms in Russia. 

And news this week confirmed that Russia is on the rise when it comes to global petroleum deals. 

Russian petro-major Rosneft announced that it is near closing on one of its biggest acquisitions ever: India’s Essar Oil. With the company’s CEO, Igor Sechin, telling shareholders at the annual general meeting that one of the last hurdles to the mega-deal has now been removed. 

Sechin noted that Essar’s creditors have withdrawn any objections to the Rosneft takeover. Now allowing the deal to move forward. 

And the deal is a massive one. 

Rosneft itself will buy a 49% interest in Essar. And the E&P firm will bring in Russian investment company United Capital Partners to take a further 24%, while commodities trader Trafigura also buys 24%.

That will give the incoming buyers near-total control of Essar. With the pricetag for the deal coming to $13 billion — making it India’s largest-ever incoming foreign investment. 

The assets this opens to Rosneft are significant. With Essar holding a key spot in India’s downstream petroleum industry — including ownership of the country’s second-largest refinery, as well as a network of gas stations. 

Beyond the assets, the deal is an important sign of geopolitical alignment. With Russia continuing to play a key role in India’s business sector, and beyond. 

That could be a very strategic move for Rosneft and other companies. With India right now attempting to open up more oil and gas development across the country — and holding numerous basins onshore and offshore with big potential. 

Russian firms may now have a front seat for such new project opportunities here. Watch for more deals from Russia’s E&Ps in country, and for Rosneft in particular to use Essar as a platform to build a new energy stronghold. 

Here’s to going forth,

Dave Forest

Add a Comment

Your email address will not be published. Required fields are marked *