Essar to purchase 50% of Kenyan refinery

Essar Energy Overseas Ltd. agreed to buy a 50% stake in the 4 million tonne/year Kenya Petroleum Refineries Ltd. (KPRL) in Mombasa.

Uchenna Izundu
International Editor
LONDON, Jan. 15 -- Essar Energy Overseas Ltd. agreed to buy a 50% stake in the 4 million tonne/year Kenya Petroleum Refineries Ltd. (KPRL) in Mombasa.

Esar is obtaining its interest from shareholders Shell Petroleum Company Ltd., Chevron Global Energy Inc., and BP Africa Ltd.

The value of the deal was not disclosed. The Kenyan government has yet to approve the agreement to buy the interest.

If the transaction is approved and completed later this year, Essar will join the government, which holds the other 50%, in running the refinery, which produces LPG, gasoline, diesel, kerosene, and fuel oil.

KPRL plans to upgrade the refnery by adding secondary units under a $400-450 million investment plan.

An Essar spokeswoman told OGJ the refinery has not been affected by the political unrest and violence in the country, which has killed more than 500 people.

The refnery's products are both consumed domestically and exported to neighboring countries, including Tanzania, Uganda, Burundi, and Rwanda. Demand for petroleum products in these markets is estimated at 5 million tonnes/year.

This will be the first refinery for parent company Essar Energy Holdings Ltd. outside of India. Essar is the second largest private oil company in India, with three exploration and production blocks in Madagascar and one in Nigeria.
Contact Uchenna Izundu at uchennai@pennwell.com.


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