• 15 hours Getting out of oil .. now
  • 18 hours Surprise! Aramco Scraps International Listing Plans
  • 13 hours Too much or doable - $900 Billion Annual Investments Needed In Renewables By 2030
  • 58 mins U.S. Judge To Question Big Oil On Climate Change
  • 22 hours EU Proposes Online Turnover Tax For Big Tech Firms
  • 14 hours U.S. Arrests Iranian Over Alleged $115 Million Sanctions Evasion Scheme Involving Venezuelan Housing Project
  • 1 hour The Facebook/Cambridge Analytica Scandal
  • 10 hours Elon Musk’s $2.6 Billion Tesla Challenge
  • 1 hour Country With Biggest Oil Reserves Biggest Threat to World Economy
  • 20 hours "Rock star of science" - Stephen Hawking, Who unlocked The Secrets Of Space And Time, Dies at 76
  • 1 day 2020 - Electricity From Renewables Will Be Cheaper Than From Most Fossil Fuels?
  • 23 hours Step forward or blackmail? DJT: Tariffs On Steel and Aluminum Will Only Come Off If New Fair NAFTA Agreement Is Signed.
  • 21 hours McDonald's Sets Greenhouse Gas Reduction Targets
  • 16 hours CERAweek Meeting
  • 16 hours Bad seven days for Martin Shkreli
  • 16 hours Nuclear Bomb = Nuclear War: Saudi Arabia Will Develop Nuclear Bomb If Iran Does
The World’s Next Oil Hotspot

The World’s Next Oil Hotspot

Ghana’s oil industry is developing…

Is Tesla About to Collapse?

Is Tesla About to Collapse?

The remarkable resilience of Tesla…

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