The acquisition will help strengthen the company's oil and gas production capacity, says a company official. At present, Essar has only one oil producing block in Mehsana, Gujarat. Last year, Essar produced 17,000 barrels of oil from this block.
"Essar is scouting for more opportunities in exploration and production through the acquisition of oil rich assets overseas," the official added.
"We plan to take our refining capacity from 210,000 barrels of oil per day (bpd) to 1 million bpd in the next three years. With the expansion at Vadinar, our capacity will go up to 700,000 bpd. The rest we plan to achieve through acquisition of assets overseas."
The company will raise $9 billion, of which it will utilise $6 billion towards expansion of the Vadinar refinery. The remaining amount will be utilised towards funding its expansion in exploratin and production activities across the globe. Last year, the company spent $75 million on exploration and production.
Recently, the company bagged an oil block in Vietnam and one in Madagascar. The prospects in some of the blocks in these countries are very promising and the company sees better production in the coming years. Essar also owns an oil block in Nigeria.
However, the decision to announce the acquisition will be made in a few weeks, as the company has not yet received any official communication from the Australian government. Recently, an Australian delegation visited India and met Essar officials, inviting investments in the oil and gas sector. The company is also looking at exploration blocks in Kurdistan, Iraq. Essar Oil is also in talks with foreign companies to explore for oil in Egypt and Yemen in a bid to expand sources.
