Essar has made a bid to buy one British and two German refineries from Anglo-Dutch oil giant Royal Dutch Shell, the Financial Times reported Tuesday without citing its source. Energy-to-telecoms group Essar has bid for the British-based Stanlow refinery in Ellesmere Port, Cheshire, and two German refineries, according to the daily business newspaper. The FT added that US company Valero Energy, Libya?s National Oil Corporation and an investment vehicle controlled by the Saudi royal family have also expressed an interest. A Shell spokesman declined to comment on the story.
In the past, the Essar Group has raised around $3.59 billion against its 33% stake in the country?s third largest mobile operator, Vodafone-Essar. The fund so raised, which is among the largest through the share monetisation route by an Indian company, was to be used by the company to lower its borrowing costs and fund investment for companies that are part of the group. The conglomerate stocks gained on BSE on speculation its bid to acquire the UK?s second- largest refinery from Royal Dutch Shell Plc would enable the company to boost earnings by selling fuels in Europe. India?s second-largest non-state refiner advanced 3.9% to Rs 4.90 rupees, the first gain in three days. The stock has added 55% this year, compared with the 56% increase in the Sensitive Index.
?They are probably looking to get entry into marketing of fuels in Europe, considering the company is expanding its capacity in India,? said Niraj Mansingka, an analyst with Edelweiss Capital Ltd. in Mumbai. Building a refinery and distribution network in Europe would be too expensive for Essar Oil, the person familiar with the Stanlow bid said.
Essar Oil MD Naresh Nayyar didn?t answer telephone calls. Shell, Europe?s largest oil producer, said yesterday that several companies expressed interest in buying the refineries. Shell is also looking to sell the Heide and Hamburg refineries in Germany as well as Canada?s Montreal East and New Zealand?s Whangarei plants. Shell said earlier this month it may sell Stanlow to reduce costs and cut spending. Declining profit margins have prompted refiners to temporarily close plants, seek the sale of others and slow operating rates. A sale of the 2,33,000 barrel-a-day Stanlow facility would come on top of Shell?s announced 8 % reduction in refining capacity. Shell is reviewing plans to sell assets totaling about 330,000 barrels a day of capacity this year and next, CEO Peter Voser said July 30.