Also signs a non-compete pact with Essar Group; latter can’t enter the oil refining and marketing business for undisclosed number of years.
Buoyed by the successful acquisition of Essar Oil and its associated infrastructure in India, Russia’s Rosneft Oil plans to nearly double the retail sites in the country to around 6,000 in the next couple of years. The company is also looking at opportunities to expand the Vadinar refinery capacity, a senior Rosneft official said on Monday. Tony Fountain, the new chairman of Essar Oil, said, “At this point of time we have clearly outlined a plan on the retail side, which is in the middle of an expansion. There will be full continuity of the programme and we would like to grow that to 6,000 sites. However, there is lack of clarity on the refinery and storage opportunities. I have asked the management led by new CEO, B Anand, to review the development plan for the refineries that can be revealed at a later date,” Fountain said. Earlier, Essar Oil had indicated their intention to double the refinery capacity at Vadinar to 40 mtpa and set up a petrochemical plant in the vicinity.
The Russian major has also signed a non-compete agreement with the Essar Group, which would mean the latter cannot enter the oil refining and marketing business for an undisclosed number of years. “There is a non-compete agreement signed between Rosneft and Essar Oil over competition in the refining and marketing space. There will be a non-compete fee that Rosneft will pay, but we cannot disclose that amount at this point as it’s a commerically sensitive information,” Fountain said. Rosneft will continue to use the Essar Oil brand name and will pay a royalty fee to Essar Group for using the brand name that would be based on the performance of the operating units, the official said.
The company will continue to honour all the product and crude sourcing contracts as of now and plans to optimise the best possible crude sourcing as per the flexibility of the refinery to process heavy and sweet crude, the official said. There will be 12 members on the Board of Directors of Essar with Tony Fountain as chairman and a United Capital Partner’s nominee. There will be 4 nominee from Rosneft, two from Trafigura, two from UCP, two independent directors and one director from Life Insurance Corporation of India.
Existing CEO, Lalit Kumar Gupta will continue to assist the board in execution of plans as senior advisor to the board. Rosneft along with consortium partners Netherlands-based Trafigura Group Pte, a commodity trading house, and Russian investment fund United Capital Partners has bought 98.26% stake in Essar Oil’s refinery, port and petrol pumps.