One of India's largest oil producers is set to receive loan backing from China.
Essar Oil Lt will sign a $1bn loan deal with the influential China Development Bank, according to sources close to the matter. The deal will be backed by the supply of refined products to China’s state-owned oil giant PetroChina.
The deal is part of the company’s efforts to refinance its costly rupee debt with low-cost overseas loans. The firm, run by billionaire brothers Shashi and Ravi Ruia, has already re-financed $481m and is planning to re-finance a further $1.8 billion within the next three to six months.
Essar, which aims to have 30-40% of its oil needs met by Latin American crude, may also view the deal as a way to purchase cheap, ultra-heavy crude from PetroChina. South American oil companies have been searching hard for buyers in Asia as the US shale boom has reduced demand for their heavy crudes.