Essar Oil on Tuesday said it has time till month end to conclude talks for acquisition of Royal Dutch Shell's three refineries in Europe.
"We have entered into exclusivity agreement with Shell," Essar Oil CEO and Managing Director Naresh K Nayyar said here. Under the pact, Shell during the validity of the agreement will 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 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 per cent stake in 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.
Media reports have valued the three refineries at 1-1.5 billion pounds ($2.48 billion).
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.
If the sale goes through, Shell will have no refinery in the UK. The refinery are to bought as going concern, Nayyar said.
The Essar Group, controlled by the Ruia family, is a multinational conglomerate and a leading global player in the sectors of steel, energy, power, telecommunications, shipping, ports and logistics, construction, minerals and retail operations.
With presence in more than 20 countries across five continents employing over 50,000 professionals, the group's annual revenues were about $15 billion for the year ending March 2009.
He said Essar has strategic intent to become a player in the global refined products market, with a capacity of at least one million barrels a day. This move is in line with this strategy, and will add almost half a million barrels towards that target.