Essar Energy Overseas Ltd, a subsidiary of Essar Oil Limited, has entered into an agreement to acquire 50% of Kenya Petroleum Refineries Ltd. (“KPRL”), a 4 million metric tonne (MMTPA) per annum refinery in Mombasa, Kenya.The Government of Kenya holds the remaining 50% of KPRL.

Essar will acquire the stake from the existing shareholders – The Shell Petroleum Company Limited, Chevron Global Energy Inc and BP Africa Limited. Subject to certain conditions, the acquisition is expected to complete in early 2008.

The Mombasa refinery is the only refinery in Eastern Africa. It currently produces LPG, gasoline, diesel, kerosene and fuel oil. The refinery is planned to be upgraded by adding secondary units at a project cost of USD 400- 450 million.

Naresh Nayyar, Chief Executive of Essar Energy Holdings Limited said “We are very pleased that our first refinery acquisition outside of India will be made in Kenya. We look forward to working with the Government of Kenya to develop KPRL further to supply the growing Kenyan and adjacent markets and finalise the upgrade project.”

KPRL’s products are sold into the Kenyan market and exported to neighbouring countries including Tanzania, Uganda, Burundi and Rwanda. Demand for petroleum products in these markets is estimated at 5 million tonnes per annum.

This, the first international acquisition by Essar in the refining sector, fits Essar’s strategy of achieving refining capacity of one million barrels per day. In addition, Essar already has three exploration and production blocks in Madagascar and one in Nigeria.

About Essar Oil
Essar Oil Limited is a fully integrated oil company of international size and scale. Its assets include a 10.5 MMTPA refinery which is being scaled up to 34 MMTPA at a project cost of US$ 6 billion, developmental rights in proven exploration blocks in India and abroad and a downstream retail network of over 1,248 fuel stations across India with the supporting infrastructure.

The Kenya Petroleum Refineries Limited serves the East African region in the supply of a range of oil products including liquefied petroleum gas, unleaded premium gasoline, regular petrol, automotive gasoil, Industrial diesel, fuel oil and special products like bitumen and grease. KPRL has two refinery complexes with distillation, hydrotreating, catalytic reforming and bitumen production units. Crude oil from the Middle East is transported by sea to Kipevu Oil Jetty in Kilindini Harbour (3km from the complex at Changamwe) and then carried by pipeline to the refinery. The finished products are also transferred to customers by pipeline.