The Ruias-controlled Essar Oil has been offered a 50% stake by the Kenyan government in a 4 million tonne per annum state-owned refinery.
The Ruias-controlled Essar Oil, the country’s second-biggest private sector refiner, has been offered a 50% stake by the Kenyan government in a 4 million tonne per annum state-owned refinery.
According to sources, the company will be purchasing a 50% stake in the Mombasa-based Kenya Petroleum Refineries. The remaining 50% will be held by the Kenyan government.
An Essar Oil spokesperson did not divulge any details about the development but said, “Yes we are engaged in discussions with the Government of Kenya to move the project ahead. However, we are yet to finalise any agreements.”
However, a reliable source confirmed the development. The source said Essar Oil will pick up the stake from three oil majors — Shell Petroleum, BP Africa (17.1% each) and Chevron (15.8%) in the refinery.
Essar has been in discussions with the Kenyan government for over a year to pick up a majority stake in the company.
Essar’s acquisition of half of the Kenyan refinery, which is the only one in East Africa, is a step in the direction of reaching a refining capacity of a million barrels of oil per day by 2012.
In September 2008, Naresh Nayyar, chief executive officer, Essar Oil, had said that the company plans to reach a refining capacity of one million barrels of oil per day globally and that it is looking at several inorganic opportunities in and outside India.
Currently, the company has a refining capacity of 210,000 barrels of oil per day at its sole refinery in Vadinar in Gujarat. The company has also embarked on an expansion programme of the refinery and plans to take the capacity up to 700,000 barrels of oil per day.
According to the website of Kenya Petroleum refinery, it has been looking at options to enhance the processing efficiency by changing the product mix. This will help the refinery to produce a larger proportion of the higher value products (LPG, petrol, kerosene and diesel) and both cheaper and more crude oil intake can be realised.
The refinery plans to achieve this through the construction of a Thermal Gasoil Unit (TGU) that converts fuel oil into lighter products.
The refinery is also planning to develop a project for the construction of a 6,700 tonnes LPG storage facility with an import and export line extending to the Kilindini harbour. It is looking at potential investors to jointly invest in the LPG project, the website said.
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