Essar buys stake in Kenya refinery

Jan. 16, 2008 at 1:28 PM
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NEW DELHI, Jan. 16 (UPI) -- Essar Energy Overseas says it has acquired a 50-percent stake in Kenya Petroleum Refineries.

It is the first deal the company has clinched outside India. The company refused to disclose the amount of the deal. The refinery, located in Mombasa, Kenya, has an annual capacity of 4 million tons.

Essar Energy Overseas, a subsidiary of Essar Oil Ltd., said in a statement released Wednesday that it had entered into an agreement to acquire 50 percent of the refinery; the remaining stake is with the Kenyan government.

Essar will acquire the stake from the existing shareholders: Shell Petroleum Co., Chevron Global Energy Inc. and BP Africa. The acquisition, which is subject to certain conditions, is expected to be completed by early 2008, the statement said.

The Mombasa refinery is the only refinery in East Africa. It produces LPG, gasoline, diesel, kerosene and fuel oil and is slated for upgrading at a cost of $400 million to $450 million. KPRL's products are sold in the Kenyan market and exported to neighboring countries, including Tanzania, Uganda, Burundi and Rwanda, an Essar official said.

"Demand for petroleum products in these markets is estimated at 5 million tons per annum. We are pleased that our first refinery acquisition outside of India will be made in Kenya and look forward to working with the Kenyan government to develop KPRL further and finalize the upgrade project," Essar Energy Holdings Chief Executive Officer Naresh Nayyar said.

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