Indian oil firm wins refinery’s 25pc sale offer
By James Anyanzwa
Indian oil giant, Essar Energy Overseas Ltd, has won the bid to acquire 25 per cent stake of the Mombasa-based Kenya Petroleum Refinery Ltd.
The strategic acquisition follows floatation of part of KPRL shareholding by oil marketers.
Shell Petroleum Company Ltd, BP Africa Ltd and Chevron Global Energy Inc own 50 per cent of KPRL, while the Government owns the remaining half.
The purchase transaction will be completed in the next six months.
"We are now working with Essar. Our expectations are that the transaction should be completed by August 2008," Mr Mwaura Ngaari, the Kenya Shell Company external affairs manager told The Standard on Monday, while confirming the sale-purchase agreement.
Ngaari, however, did not disclose the price paid for the stake citing confidentiality clause of the deal.
However, Essar will spend close to Sh32.4 billion (between $400-$450 million) to upgrade the refinery by adding secondary units.
"There are many things we need to finalise. The deal is very complex," said Ngaari.
Essar Energy Overseas Ltd, a subsidiary of Essar Oil Ltd, becomes the first Indian company to buy a stake in an overseas refinery.
The company won the bid after defeating, among others, Reliance Industries — also from India — and Libya Oil Kenya.
The acquisition is expected to fit into Essar’s strategy of achieving refining capacity of one million barrels per day.
The Government holds 50 per cent of KPRL and has a pre-emption right over the sale fronted by the oil marketers. It’s, however, not clear whether it would exercise its rights considering that it also plans to offload its shares under ongoing privatisation programme.
The four million-tonne refinery is the only facility in East African region and produces gasoline, diesel, kerosene and fuel oil.
"The refinery offers lot of opportunity since it is the only refinery in the region and caters for the surrounding market," Mr Naresh Nayyar, the chief executive of Essar Energy Holdings Ltd was recently quoted by the Indian media.
KPRL’s products are exported to DRC, Uganda, Burundi and Rwanda.
Demand for petroleum products in these markets is estimated at five million tonnes.
Essar already has three exploration and production blocks in Madagascar and one in Nigeria.
A successful acquisition was to allow Reliance, India‘s biggest private sector company with a market value of more then $67 billion, to source petroleum products for selling to European and American markets.
Reliance operates a refinery in the western Indian state of Gujarat and its subsidiary Reliance Petroleum, in which Chevron holds five per cent, is building a new unit nearby.
Its entry, however, has been temporarily scuttled by the emergence of Essar.
KPRL uses crude oil from the West Asia and transports it by sea to Kipevu Oil Jetty in Kilindini Harbour (three km from the complex at Changamwe) for processing. The refined products are then carried by pipeline to markets locally and in the region.
Indian oil giant, Essar Energy Overseas Ltd, has won the bid to acquire 25 per cent stake of the Mombasa-based Kenya Petroleum Refinery Ltd.
The strategic acquisition follows floatation of part of KPRL shareholding by oil marketers.
Shell Petroleum Company Ltd, BP Africa Ltd and Chevron Global Energy Inc own 50 per cent of KPRL, while the Government owns the remaining half.
The purchase transaction will be completed in the next six months.
"We are now working with Essar. Our expectations are that the transaction should be completed by August 2008," Mr Mwaura Ngaari, the Kenya Shell Company external affairs manager told The Standard on Monday, while confirming the sale-purchase agreement.
Ngaari, however, did not disclose the price paid for the stake citing confidentiality clause of the deal.
However, Essar will spend close to Sh32.4 billion (between $400-$450 million) to upgrade the refinery by adding secondary units.
"There are many things we need to finalise. The deal is very complex," said Ngaari.
Essar Energy Overseas Ltd, a subsidiary of Essar Oil Ltd, becomes the first Indian company to buy a stake in an overseas refinery.
The company won the bid after defeating, among others, Reliance Industries — also from India — and Libya Oil Kenya.
The acquisition is expected to fit into Essar’s strategy of achieving refining capacity of one million barrels per day.
The Government holds 50 per cent of KPRL and has a pre-emption right over the sale fronted by the oil marketers. It’s, however, not clear whether it would exercise its rights considering that it also plans to offload its shares under ongoing privatisation programme.
The four million-tonne refinery is the only facility in East African region and produces gasoline, diesel, kerosene and fuel oil.
"The refinery offers lot of opportunity since it is the only refinery in the region and caters for the surrounding market," Mr Naresh Nayyar, the chief executive of Essar Energy Holdings Ltd was recently quoted by the Indian media.
KPRL’s products are exported to DRC, Uganda, Burundi and Rwanda.
Demand for petroleum products in these markets is estimated at five million tonnes.
Essar already has three exploration and production blocks in Madagascar and one in Nigeria.
A successful acquisition was to allow Reliance, India‘s biggest private sector company with a market value of more then $67 billion, to source petroleum products for selling to European and American markets.
Reliance operates a refinery in the western Indian state of Gujarat and its subsidiary Reliance Petroleum, in which Chevron holds five per cent, is building a new unit nearby.
Its entry, however, has been temporarily scuttled by the emergence of Essar.
KPRL uses crude oil from the West Asia and transports it by sea to Kipevu Oil Jetty in Kilindini Harbour (three km from the complex at Changamwe) for processing. The refined products are then carried by pipeline to markets locally and in the region.
posted by Mwananchi at 7:12 PM
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