(Adds more chief executive's comments, details on Cairn crude buy, background)
By Rakesh Sharma
Of DOW JONES NEWSWIRES
NEW DELHI -(Dow Jones)- India's Essar Oil Ltd.'s (500134.BY) exclusive talks with Royal Dutch Shell PLC (RDSB) to buy three refineries in Europe will end Nov. 30, the company's chief executive said Tuesday.
"We have a lot of teams working on this," Naresh Nayyar, also the managing director of Essar Oil, told reporters on the sidelines of an industry event.
"At this stage everything is very sensitive. We can't make any comment. But yes, we have entered into exclusivity and it is for four weeks, which ends Nov. 30."
A Shell spokesman said Friday the company is in talks with Essar group about its plans to sell two refineries in Germany and one in the U.K.
Shell plans to sell off about 15% of its global refining capacity, or about 600,000 barrels a day of capacity, in the next three years as part of its restructuring program aimed at increasing profitability and efficiency.
Nayyar said teams including investment and commercial bankers, taxation consultants and others are working on the deal.
"There are a lot of things which need to be done during this period apart from due diligence," he said.
Essar Oil operates a 210,000 barrels a day refinery on the West coast of India. Plans are under way to expand refinery capacity to 680,000 barrels a day, the company said Oct. 31. "We have an overall plan and strategy to have 1 million barrels per day refining capacity globally. This is a part of our overall strategy," Nayyar said.
"With this acquisition we will be far above 1 million barrels per day. We will be the first Indian company who will be truly having multinational refining capacity."
In July, Essar acquired a 50% stake in 80,000-barrel-a-day Mombasa-based Kenya Petroleum Refineries Ltd., along with the right to sell oil products from its Indian refinery into east Africa, from Shell, Chevron Corp. (CVX) and BP PLC (BP).
"We have mapped different global markets and we are trying to evolve an entry strategy in different markets," Nayyar said, when asked if Essar is looking at other African countries for selling its products.
EYES ON CAIRN CRUDE
Essar is in talks with Cairn India Ltd. (532792.BY), a unit of Cairn Energy PLC (CNE.LN), to buy crude oil from Cairn's Mangala field in Northwestern Rajasthan state, Nayyar said, but didn't give any further detail.
Cairn, which began commercial production at the field Aug. 29, is currently producing 10,000 barrels of oil a day. It plans to ramp up output to 125,000 barrels a day in the first half of 2010.
Cairn, which earlier had government approval to sell crude to India's state-run refiners, on Oct. 29 said the federal government has agreed that private refiners qualify as additional offtakers of the Mangala crude.
-By Rakesh Sharma, Dow Jones Newswires; +91-11-4356-3334; rakesh.sharma@dowjones.com