Last month, Essar started exclusive talks with Shell to purchase its Stanlow plant in the UK and Heide and Harburg refineries in Germany. The refineries are valued at between GBP1 billion – GBP1.5 billion.

Both the companies are said to have reached consensus on issues regarding the deal. After the takeover, Essar will supply products to Shell from the refinery, Business Standard reported citing a source close to the development.

According to Peter Voser, chief executive of Shell, falling fuel demand and declining profit margins have prompted many oil companies to offload refineries in Europe.

Shell now seeks to reduce costs and cut spending after the global economic downturn curbed fuel demand and dragged down fuel prices. As part of its restructuring plan, the company is reviewing the future of its refineries and planning to sell about 15% of its global refining capacity in next three years.