London Stock Exchange-listed Essar Energy Plc has decided to exit its joint venture Kenya Petroleum Refineries Ltd (KPRL), which operates the oil refinery in Mombasa, by selling its entire 50 per cent stake to the government of Kenya, the company said on Thursday.
This exit follows an series of studies by international consultants into the technical, economic and funding elements of an upgrade of the Mombasa refinery. Following these studies, Essar Energy believes that the upgrade is not economically viable in the current refining environment.
Essar Energy had acquired 50 per cent stake in KPRL in July 2009 for $7 million from BP, Chevron and Royal Dutch Shell. Shell and BP held 17.1 per cent stake each while Chevron had 15.8 per cent stake.
Under the terms of the shareholders’ agreement established with the Kenyan government, Essar Energy has the right, under certain conditions, to exercise a put option under which the government of Kenya would buy its 50 per cent share in KPRL for $5 million.
Essar Energy is getting about $2 million less than what it paid at that time.
Essar Energy, a part of Essar Group, is one of India’s largest private power producers with 3,910 MW of installed capacity and projects under construction to expand its capacity to 6,700 MW. It also has oil & gas assets with the Vadinar refinery located in Gujarat being India’s second largest private sector oil refinery with throughput capacity of 20 million metric tonnes per annum, or 405,000 barrels per day.
It’s another international asset, the Stanlow refinery is the UK’s second-largest refinery with throughput capacity of 296,000 barrels per day, or 14.6 million metric tonnes per annum.
Last July, the firm sold 50 per cent stake in Vietnam gas block to ENI International.
(Edited by Joby Puthuparampil Johnson)