Essar Oil slips 15% from day's high, ends 5% lower on stake sale reports

NEW DELHI: After rising as much as 5 per cent, stocks of Essar Oil witnessed selling spree in the afternoon trades and fell over 10 per cent in intraday trade.

The stock came off sharply and fell over 15 per cent in intraday trade from its 52-week high of Rs 198.35, hit earlier in the day.

The stock finally settled 5.49 per cent lower at Rs 178.25.

Billionaire brothers Shashi and Ravi Ruia have agreed to sell a 49 per cent stake in Essar Oil to Russian energy major OAO Rosneft.

The stake sale will provide the Indian company an assured supply of crude while its Russian counterpart obtains a foothold in Asia's third largest economy.

Essar Oil pared some of the intraday gains but was still trading 1.3 per cent higher at Rs 191.05. It hit a low of Rs 189.40 and a 52-week high of Rs 198.35 in trade on BSE.

The companies did not disclose the deal amount but it is expected to value Essar Oil at $7-$8 billion (Rs 42,000-Rs 48,000 crore). The negotiations between Rosneft and Essar were first reported by ET in its March 25 edition.

Rosneft and Essar also signed a final agreement for supply of 100 million tonnes of crude oil over a period of 10 years for the Vadinar refinery, said the ET report. An initial crude supply deal was signed in December 2014.

"The refining capacity of the Vadinar refinery is 20 million tonnes per annum. The parties intend to significantly increase the refinery's capacity, which will bring the capacity level of 45 mtpa by the year 2020," Rosneft said in a statement Wednesday.