Essar Energy Plc, an Indian oil and gas company, plans to divest more of its exploration and production operations to focus on gas developments in the Asian country, where demand is rising.
The company, based in Mumbai, will exit “lower margin non-core assets,” it said today in a statement, without naming them. Essar’s net loss grew to $391.6 million in the six months ended September from $200.8 million, with depreciation in the rupee contributing to $483 million of exchange losses.
Essar sees margins from processing crude oil into fuels at its refineries staying under pressure in the near-term.
Shares dropped 13 percent to close at 87.35 pence in London trading, the biggest slump since February last year.
Sales rose 5 percent to $13.4 billion. Underlying net debt declined to $6.56 billion in the period from $6.74 billion.
Essar, which has five exploration blocks outside of India, said last month it would sell its 50 percent in Kenya’s only oil refinery to the state. In July, it agreed to sell half of a Vietnam offshore gas exploration block to Eni SpA. It has stakes in blocks including in Nigeria, Madagascar and Indonesia. Power demand will rise about 6 percent a year in India, Essar said.
The company will “farm out” or sell blocks in India and overseas, Chief Executive Officer Sushil Maroo said on a call.
Essar sees a “robust” market in India in the longer term, with diesel demand growing about 7 percent a year and gasoline consumption rising by as much as 5 percent, the company said. The government proposed doubling gas prices to $8.40 per million British thermal units from April to spur production, Essar said.