Rosneft consortium looks to complete Essar acquisition by March: report

A consortium led by Russian oil giant Rosneft is looking to complete its $12.9-billion acquisition of Essar Oil by March, reports quoting Russian sources said on Monday.

The delay was due to the complexity of Essar's structure and financing, and not due to any regulatory issues connected with the majority acquisition in a strategically important industry, the reports said.

Rosneft is under Western sanctions due to Moscow's role in the Ukraine crisis, and the deal has been structured to skirt the sanctions issue, say sources.

Under the deal announced during President Vladimir Putin's visit to India in October, Rosneft together with two other partners was to buy 98 per cent of Essar Oil. The deal is now expected to be completed on 15 March.

The acquisition of Essar Oil will give Russian state-owned oil major Rosneft access to India's vast market - one of the world's fastest-growing - for fuel and petroleum product.

Rosneft will acquire a 49-per cent share in Essar while commodities trader Trafigura and Russian private investment group United Capital Partners (UCP) will share another 49 per cent.

The deal was structured to avoid the risk of Western sanctions, Reuters quoted the chief executive of Russian bank VTB, which is involved in financing the deal, as saying.

Essar Oil, which operates a 400,000 barrel-a-day refinery in Vadinar in Gujarat, had revived its fuel distribution system that includes 2,470 filling stations across the country.

One of the sources close to the deal said discussions about the management team at Essar were holding up completion of the deal, but did not elaborate.

Sources said Essar's Indian creditor banks, which include State Bank of India (SBI), must approve a change of control at the company as the deal was part of the company's debt restructuring programme, the source said.

"The process of receiving lender approvals, including SBI, for the transaction is underway. Sanctions provisions do not apply to the transaction," Reuters cited Essar as stating in emailed comments.