Essar Oil, Shell in talks till Nov-end

Essar Oil, Shell in talks till Nov-end

New Delhi: Essar Oil on Tuesday said it has time till this month-end to conclude talks for the acquisition of Royal Dutch Shell’s three refineries in Europe.

“We have entered into exclusivity agreement with Shell," Essar Oil chief executive officer and managing director Naresh K. Nayyar told reporters here.

Under the pact, Shell will, during the validity of the agreement, talk only with Essar for sale of its Stanlow refinery in northwest England and the Heide and Hamburg units in Germany.

“The exclusivity period is till November 30," he said.

The Hamburg unit has the capacity to process 107,000 barrels per day of crude, while Heide has a capacity of 83,000 barrels a day. Stanlow, Britain’s second-largest refinery, can process 272,000 barrels a day.

Essar is considering buying three Shell refineries as part of its strategy to have a refining capacity of at least one million bpd globally, Nayyar said.

The company currently operates a 280,000 bpd refinery at Vadinar in Jamnagar district of Gujarat and has 50% stake in a 80,000 bpd refinery at Mombasa in Kenya. The Vadinar refinery is to be expanded to 700,000 bpd by 2012.

“For the time being, we will not be holding discussions with any third party other than Essar. However, this does not guarantee a sale. It is too early to comment on timescales," a Shell spokesperson said last week.

Shell, based in The Hague, is looking to save cash and slash costs in order to fight the global economic downturn that has reduced energy demand and oil prices.