Essar Oil Current Affairs - 2019
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Russian consortium led energy giant Rosneft Oil Company has agreed to acquire India’s second biggest private oil firm Essar Oil in an all-cash deal valued at about US $13 billion.
The consortium includes Rosneft Oil Company, Netherlands-based commodities trader Trafigura and private investment group United Capital Partners.
The business transaction was announced in the presence of Prime Minister Narendra Modi and Russian President Vladimir Putin at the 8th BRICS Summit in Goa.
Under this deal
- Rosneft bought a 49% stake in Essar Oil’s refinery, port and petrol pumps, while Trafigura Group Pte and United Capital Partners split 49% equity equally.
- It includes $10.9 billion for Essar Oil’s Vadinar refinery (India’s second-largest refinery with a capacity of 20 million tonnes) and $2 billion for a port terminal that helps feed refinery.
- It also includes Essar Oil’s debt of $4.5 billion and about $2 billion debt with the Port Company and power plant.
What is significance of the deal?
- This acquisition is the largest ever foreign acquisition in India and also is the single largest foreign investment in the Indian refining sector
- It is Russia’s largest outbound or foreign acquisition deal. It significant milestone for Rosneft as it is entering India, one of the most promising and fast-growing world markets.
- With this, Rosneft becomes third international player after Royal Dutch and Shell and British Petroleum to enter Indian fuel retailing market.
- It also proves the attractiveness of the Indian energy market to foreign investors as India is one of the fastest growing fuel consuming economies in the world
How India and Russia will benefit?
- It will also help to strengthen the existing ties between Russia, one of world’s largest oil producer and India, one of the world’s fastest growing fuel consumer.
- Russia is keen to deepen its Soviet-era economic ties with India at a time when its own economy is stagnant and is hit by Western sanctions over the Crimean crisis.
About Essar Group
Essar Group is an Indian conglomerate led by Shashi Ruia and Ravi Ruia. It controls number of world-class assets diversified across the core sectors of Energy, Metals & Mining, Infrastructure and Services. It also occupies a strategic position in the global oil market and owns world-class refining and infrastructure assets.
As per recently released report by British Petroleum (BP) Energy Company, United States (US) became the world’s largest oil producer in 2014 surpassing Saudi Arabia.
It was reveled in BP Energy Company report tilled Statistical Review of World Energy.
Key facts from Report
- Oil production: US had produced 11.6 million barrels of oil per day (bpd) i.e. 15.9% more oil in 2014.
- While, Saudi Arabia was placed second position as it had produced 11.5 million bpd in 2014.
- Russia was placed at third position with 10.8 million bpd oil production.
- Natural gas: US also has surpassed Russia as the world’s largest producer of natural gas. In 2014, US had produced 1,250.4 million tons of oil equivalent natural gas.
- Russia had produced 1,062 million tons of oil equivalent natural gas in 2014.
- Consumption side: Primary energy consumption had slowed markedly with growth of just 0.9% in 2014. It was a lower rate than at any time since the late 1990s.
- Growth in consumption of China has slowed to its lowest level since 1998. The main reason for is due to its economy rebalances which are away from energy intensive sectors. But China had remained the world’s largest growth market for energy in 2014.
- China had consumed 2972.1 million tons of oil equivalent energy. US had consumed 2298.7 million tons. Japan had consumed 456.1 million tons oil equivalent energy. Russia had consumed 681.9 million tons oil equivalent energy.
- Facts related to India: India’s oil production gad declined by 1.3% at 895,000 bpd, while the consumption had increased by 3% to 3.8 million bpd.
- India has shown 7.1% rise in energy consumption. It is the fastest consumption among major economies. It had consumed 637.8 million tons of oil and oil equivalent natural gas, coal, nuclear energy, hydroelectricity and renewable energy.
- Refining: India is self-sufficient and fourth largest in refining capacity with 4.3 million bpd. Top three nations are US (17.79 million bpd), China (14.09 million bpd) and Russia (6.3 million bpd).