India's petroleum major, Essar Oil Ltd has announced that Essar Energy Overseas Ltd, a subsidiary of the Company has entered into an agreement to acquire 50% stake in Kenya Petroleum Refineries Ltd. ("KPRL"). KPRL operates in Mombasa, Kenya with a capacity of 4 million metric tonnes per annum (MMTPA). The Government of Kenya holds the remaining 50% stake of KPRL.

However, the company has not revealed the cost of the acquisition.

The refinery in Mombasa, previously half-owned by Chevron, BP and Royal Dutch Shell, is the only one in eastern Africa. It currently produces LPG, gasoline, diesel, kerosene and fuel oil. The refinery is planned to be upgraded by adding secondary units at a project cost of USD 400-450 million, an official release said.

KPRL's products are sold in the Kenyan market and exported to neighboring countries including Tanzania, Uganda, Burundi and Rwanda. Demand for petroleum products in these markets is estimated at 5 million tonnes per annum as per estimates of Essar Oil.

Naresh Nayyar, Chief Executive of Essar Energy Holdings Ltd said, "We are very pleased that our first refinery acquisition outside of India will be made in Kenya. We look forward to working with the Government of Kenya to develop KPRL further to supply the growing Kenyan and adjacent markets and finalize the upgrade project."

Essar will acquire the stake from the existing shareholders — Shell, Chevron and BR Subject to certain conditions, the acquisition is expected to complete in early 2008.

The stock of Essar Oil closed today at Rs. 270. It touched an intraday high of Rs. 311 and Rs. 285.