Essar Oil to consolidate E&P biz, to raise $2 bn

MUMBAI: The Ruia-promoted Essar Oil has decided to consolidate its upstream exploration and production (E&P) now under its proposed arm, Essar Exploration & Production, with itself. This move is aimed at becoming a fully integrated oil company having upstream, refining and downstream marketing activities.

The company’s board has also decided to raise $2 billion to meet the funds required for various developmental business activities including expansion of the refining capacity, E&P activities, expanding of marketing network, strengthening of working capital and other business purposes.

On completion of this exercise, Essar Oil will have nine oil and gas and coal bed methane blocks. These blocks comprise three onshore blocks in Madagascar, one offshore block in Nigeria, one block in Mehsana, Gujarat, two onshore blocks in Assam, offfshore field Ratna & R-Series and a coal bed methane block in Raniganj, West Bengal, the company said in a statement.

The company has commissioned all the processing units of its 10.5 mmtpa refinery in Gujarat. All the units are expected to reach full capacity by this quarter-end. Besides, the dispatch facilities by rail and road have also been commissioned.

The company’s board of directors has decided to raise long-term finance by various capital raising options including issue of equity shares, convertible debentures, global depository receipts, ADRs, foreign currency convertible bonds by way of public or private offering in the domestic and international market.

The board has also considered QIP for an amount not exceeding Rs 8,000 crore. The board decided to seek approval of shareholders for passing an enabling resolution for issue of further securities for an amount not exceeding $2 billion.