Following meetings and talks between the Energy Firm Essar and the Royal Dutch Shell Plc, both organisatios made a pact to buy three refineries from Royal Dutch Shell. The negotiations however shows that both Organisations will still have more talks on the agreement. Although, negotiations made so far implies that the Indian steel and energy conglomerate will be the preferred bidder other competitors.

Shell spokersperson, Ms Sally Hepton said: '' Shell can confirm today that we are in negotiations with Essar for the potential sale of Stanlow, Heide and Harburg refineries. For the time being, Shell will not be holding discussions with any third party other than Essar, although this does not guarantee a sale and it is too early for Shell to confirm a deal or comment on timescales,”

Discussions to buy the three refineries from Shell, Europe’s largest refiner, revealed a lot of interested organisations, like Libya’s National Oil Corporation and an investment vehicle company run by a Saudi Royal family. Reports also state that the three refineries have a combined capacity of 500,000 barrels per day, or about 26 million tonnes per annum.

A staff of Essar's Oil said : “ Essar has entered into an exclusive negotiation with Shell for buying Shell’s Refinery at Stanlow in UK and Heide and Harburg in Germany. However, it is too premature to comment any further.” Essar is reportedly learnt to have offered £1.2 billion for the three refineries, while Shell is learnt to have sought up to £1.5 billion, for the three refineries.

The Essar group is also talking with UBS, Citigroup and JPMorgan for arranging a loan of $750 million to part finance the deal, if it gets the three European refineries. Essar Oil currently has a capacity of 10.5 million tonnes and plans to expand this to 34 million tonnes. Essar’s refinery has a capacity of 2 million tonnes, which will raise Essar Group’s total refining capacity at 36 million tonnes.

“Refinery assets are available at dirt cheap prices in the US and Europe and it is the right time to buy them,” said an analyst from an international firm. “Essar Energy will have increased distribution capacity in Europe if it owns refineries there. Existing refineries have pipeline, road and sea links, all of which would be hard to replicate from scratch,” he added.