* Essar to supply refined fuel to Petrochina in debt deal
* May look at taking Latin American crude from Petrochina
MUMBAI/NEW DELHI, May 20 (Reuters) - India's Essar Oil Ltd
will sign a $1 billion loan deal with China on Tuesday
that sources with knowledge of the matter said would be backed
by supply of refined products to top state oil producer
Essar Oil could sign a preliminary agreement with China
Development Bank (CDB) on Tuesday to borrow that amount during
Chinese Prime Minister Li Keqiang's visit to Mumbai, his first
foreign trip, the sources said.
The Indian firm, controlled by billionaire brothers Shashi
and Ravi Ruia, has been replacing its rupee debt with
lower-cost, overseas loans and has so far refinanced $481
"As part of our initiative to dollarize our debt, we have
been in discussion with several international banks, including
Chinese banks. CDB is part of that conversation," Essar Oil said
in a statement on Monday in response to an article in the
Economic Times. It declined to confirm the deal.
The group hopes to refinance another $1.8 billion within the
next three to six months, Essar Oil Chief Executive L. K. Gupta
had said on May 10.
Details on pricing of the products and how shipments would
be credited against the loan still need to be worked out, the
The deal could also signal a long-term tie-up on crude
supplies, with Essar looking to take ultra-heavy Latin American
crude from PetroChina, one of the sources said.
Crude oil producers in Latin America have been scouting for
new buyers in Asia as the U.S. shale oil and gas boom has
reduced demand for their heavy and ultra heavy crudes.
Essar has previously purchased Castilla crude from China
National United Oil Corp, or Chinaoil, and Ecuador's Napo crude
from Petrochina, trade sources said. The Indian refiner aims to
meet about 30-40 percent of its oil needs from Latin America,
Gupta said earlier this month.
"We have been sourcing a significant portion of our crude
from Latin America. PetroChina is a strong player in this region
and will thus continue to be an important trade counter party
for us," Essar said in its statement on Monday.
Essar Oil, India's second-largest private refiner with a
405,000 barrels per day refinery at Vadinar in western India, is
majority owned by London-listed Essar Energy.