Essar Group, the Indian multinational conglomerate, has reportedly held talks with Brazil-based Petroleo Brasileiro SA to buy the nation’s second-biggest oil refinery.
Sources cite that Essar made a bidding offer to Petroleo Brasileiro to debut in Brazil. Brazil’s oil producer has received a minimum two bidding offers for the 323,000 barrels/ day Landulpho Alves refinery in Bahia, known as Rlam.
According to sources, Abu Dhabi’s Mubadala is also in a race to place a bid for Petroleo. The top bidder is required to enter an additional round of negotiations, generally lasting numerous weeks, to decide contract terms.
Depending on the results, the transaction may require a final round of bidding that could change the results of the competition. It is still unclear whether other players, like China’s Sinopec, made offers.
In a note to clients, analysts valued the Rlam refinery at USD 2.5 billion. Petrobras declined to comment while Essar did not respond to request for comment.
For the record, Essar Group is an Indian multinational conglomerate established by Ravi Ruia and Shashi Ruia in 1969. The company operates in several industries including Energy, Metal & Mining, infrastructure, and services. The group has invested USD 28 billion in assets in mining, infrastructure, energy, and services.
The on-going COVID-19 pandemic significantly brought down the demand and price of crude oil across the world. In response to this situation, OPEC and its allies including Russia decided to reduce production by 9.7 million barrels per/day or 10% of global demand to support oil prices.
However, as global oil demand recovers, and prices have increased from their lows, Russia and OPEC will likely to ease oil production cuts form August. The oil production cuts were meant to last until June end but then had been extended into July.