• 4 minutes Tariffs to derail $83.7 Billion Chinese Investment in West Virginia
  • 9 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 17 minutes Kaplan Says Rising Oil Prices Won't Hurt US Economy
  • 19 hours Kaplan Says Rising Oil Prices Won't Hurt US Economy
  • 3 hours Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 3 hours Saudi Arabia turns to solar
  • 13 hours Could oil demand collapse rapidly? Yup, sure could.
  • 1 hour Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
  • 8 hours Corruption On The Top: Netanyahu's Wife Charged With Misuse of Public Funds for Meals
  • 14 hours Gazprom Exports to EU Hit Record
  • 3 hours Saudi Arabia plans to physically cut off Qatar by moat, nuclear waste and military base
  • 14 hours OPEC Meeting Could End Without Decision - Irony Note Added from OPEC Children's Book
  • 18 hours China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 10 hours U.S. Withdraws From U.N. Human Rights Council
  • 12 hours What If Canada Had Wind and Not Oilsands?
  • 12 hours "The Gasoline Car Is a Car With a Future"
  • 1 day EVs Could Help Coal Demand
  • 7 hours EU Confirms Trade Retaliation Measures vs. U.S. To Take Effect on June 22
  • 13 hours Sell out now or hold on?
India, China Look To Form ‘Oil Buyers Club’

India, China Look To Form ‘Oil Buyers Club’

Amid rising oil prices, India…

Shale Drillers’ $7 Billion Hedging Error

Shale Drillers’ $7 Billion Hedging Error

The rebound in oil prices…

Essar Oil Seeks Looks To Raise More Than $1 Billion From Oil Traders

Oil fire

India’s refiner Essar Oil—in which Russian state-controlled oil firm Rosneft holds 49 percent—is looking to raise more than US$1 billion in pre-finance loans from oil trading firms, after Western banks have been reluctant to lend money to the Indian company partly owned by Russia’s biggest oil company that is subject to U.S. sanctions.

According to banking and trading sources familiar with the talks who spoke to Reuters, Essar Oil will be seeking the pre-payment loans from oil traders in exchange for repaying them with refined oil products in three to four years, as the Indian refiner wants to diversify its creditor base and not rely too much on Indian lenders for financing.

Western banks are not explicitly banned from extending funding to Essar Oil, as the sanctions stipulate that Rosneft’s majority-owned entities are subject to sanctions, while its 49-percent stake is just shy of the majority interest in Essar. Nevertheless, banks are cautious and wary of the Russian link, banking sources told Reuters.

“Essar and Rosneft initially signaled interest in borrowing but have gone silent in the past six months after most banks signaled to them they would not be able to lend,” a source with a major Western bank, which initially received an invitation to express interest, told Reuters.

According to a second banking source, Essar Oil is expected to issue a request for proposal for the pre-finance loan as early as at the beginning of the second quarter of 2018. The traders that would become creditors would be repaid in gasoline and gasoil.

In August 2017, Rosneft finalized the acquisition of 49.13 percent in Essar Oil, while an investment consortium comprising oil trader Trafigura and UCP acquired another 49.13 percent in the Indian refiner. The closing of the acquisition of Essar Oil was delayed compared to its initial target closing date, the end of 2016, because Indian creditors of Essar Oil delayed their approval of the deal.

Bank loans to Essar Oil are complicated not only by the Russian shareholder of 49 percent of the company. Banks are also wary that Essar Oil relies on significant volumes of crude oil from Iran and Venezuela for its operations. With the U.S. sanctions on Iran still in place, and possibly expanding, and the U.S. considering imposing sanctions on Venezuela’s oil industry, Western banks are not really rushing to lend money to Essar Oil.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News