Eying the lucrative retail fuel market in India, Russia’s largest oil producer Rosneft has approved $13 billion in funds for buying a controlling stake in India’s Essar Oil. This massive buy will help Rosneft to strengthen its position in the Indian market. As India is the fastest growing economy in the world and has shown high growth potential, Rosneft sees it as an opportunity to invest in the country by buying the controlling stake in Essar Oil. The decision was taken much earlier in October, but its execution was delayed. Today, Rosneft has cleared all roadblocks and announced its final decision regarding the buyout of Essar Oil.
After the buyout deal, Rosneft will hold 49% stake in Essar Oil. Another 25% in the company will be picked up by commodity trader Trafigura. The acquisition will help Rosneft to augment its oil refining capacity by 20%. It will also give Rosneft full control of the nearly 2,700 Essar Oil petrol pumps currently operational in the country. Rosneft is also eying the future, since current car penetration in India is only around 18 units per 1,000 people whereas it’s around one car for every two people in most developed countries.