Saudi Aramco has completed preliminary discussions with India’s Essar Group with regards to buying the latter’s refinery business for US$5.5bn
According to Bloomberg, Essar Group is considering the sale of its assets after its earnings were hit by a fall in commodity prices, weak demand, and lower capacity usage at its businesses.
Saudi Aramco has previously stated it will continue to invest in the oil and gas sector, despite the global slowdown in crude values.
The oil company also confirmed it is considering various options to allow for a full or partial floatation of an initial public offering (IPO) of its stake.
Saudio Aramco chairman Khalid Al Falih said the sale of a stake in the whole company would involve issues related to law and sovereignty that would need to be resolved. “Our investments in capacity of oil and gas have not slowed down. We have been able to do a lot of cuts in spending by simply driving down costs.”
Essar Group was also reportedly eyeing US$3bn from a sale of 49 per cent stake in Essar Oil to Rosneft, a Russian oil company held majorly by the government. It has signed a non-binding term sheet with the Russian company for exclusive negotiations about the potential purchase of a 49 per cent stake in Essar Oil, but declined to comment further.
Rosneft also released a statement regarding its work with Essar Group.
“Rosneft has not changed its plans and continues work in accordance with the signed agreement on terms for the company’s possible entry into shareholding structure of Essar Oil,” the Russian company said in an issued statement.
“Talks on this project continue on the working group level in accordance with the existing agreement on exclusivity.”
