New Delhi, 11 December 2014

Essar Group on Thursday, signed a deal with Russia’s top crude oil producer Rosneft to buy 10 million tons a year of oil, worth about US $10 billion, for 10 years beginning 2015.

The agreement was signed in presence of Russian President Vladimir Putin and Prime Minister Narendra Modi.

Moscow-based OAO Rosneft Chairman Igor Ivanovich Sechin said the agreement was to ship by sea as much as 10 million tons of oil per year to Essar Group. The oil deal, Sechin said, could be extended beyond 10 years.

Rosneft and Essar signed key terms of oil and oil products supplies to Essar refineries in the country.

Essar Oil – which operates a 405,000 barrels per day (bpd) refinery at Vadinar in Gujarat – and Rosneft issued a joint statement in the national capital, saying that supplies may begin in 2015.

This is one of the biggest oil import deals any domestic refiner as signed.

Consequently, Rosneft expands its distribution area and builds up deliveries to the region, where the world’s economy growth zones are concentrated, the statement said.

Essar head Shashi Ruia and Sechin signed the agreement in the presence the Russian President and PM Modi.

The Rosneft chairman said the agreement will have a substantial impact on the scale of economic cooperation between Russia and India.

“For our Indian partners the signing of this agreement represents a vital element of basic supplies diversification which, at the same time, will ensure energy security for the country. The Russian counterpart, in turn, will get the possibility of production and supplies volume planning to a new region with considerable growth potential,” Sechin said.

Ruia said the pact provides good long term raw material security to Essar’s refineries.

The reached agreement opens new horizons of cooperation between the two countries, thanks to the synergistic potential of the partnership in upstream and downstream areas of two leaders of the oil and gas industry of Russia and India.

Thanks to this agreement Rosneft grants itself a secure market outlet of oil and oil products, while Essar gains a reliable and stable partner as a supplier of oil and oil products to its refining facilities, the statement said.