This story is from January 16, 2008

Essar buys BP Shell, Chevron stake in Kenya

TNN / Jan 16, 2008, 00:04 IST

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According to sources in Essar, the acquisition is expected to be completed in early 2008, subject to certain conditions.

Essar buys BP Shell, Chevron stake in Kenya

NEW DELHI: Essar Energy Overseas Ltd, a subsidiary of Essar Oil Ltd promoted by the Ruias, has acquired, for an undisclosed amount, 50% stake owned by Shell Petroleum Company Ltd, Chevron Global Energy Inc and BP Africa Ltd in a Kenyan refinery which has a capacity of processing 4 million tonnes of crude a year.
The refinery, located in Mombasa and the only one in eastern Africa, is being operated by Kenya Petroleum Refineries Ltd in which the three multinationals together hold 50%.
The government of Kenya holds the remaining equity. Subject to certain conditions, the acquisition is expected to be completed in early 2008, Essar said. Essar plans to upgrade the refinery for producing more products at a projected investment of $400-450 million.
The refinery’s products are sold in the Kenyan market and exported to neighbouring countries such as Tanzania, Uganda, Burundi and Rwanda. Demand for petroleum products in these markets is estimated at 5 million tonnes a year.

"This is the first downstream acquisition overseas for any Indian company. We look forward to working with the government of Kenya to develop KPRL further to supply the growing Kenyan and adjacent markets and finalize the upgrade project," Essar Energy CEO Naresh Nayyar said.
The acquisition, also the first international acquisition by Essar in the refining sector, fits the company’s strategy of achieving refining capacity of 10 lakh barrels per day, including three lakh barrels per day outside the country.
The company already has wells in Africa - three exploration and production blocks in Madagascar and one in Nigeria. The Essar Oil board has also last month approved plans to expand the capacity at its Vadinar refinery from 10.5 million tonnes to 34 million tonnes per annum by 2010 at an investment of $6 billion.

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