Russia’s Rosneft has signed a preliminary deal to buy 49 percent stake India’s Essar Oil.

“Expanding the scope of partnership, Rosneft and Essar Oil & Gas Ltd / Essar Energy Holdings Limited, companies incorporated and managed under the laws of Mauritius, have signed a non-binding Term Sheet with regard to Rosneft’s participation in the equity capital of Essar Oil Limited with a share of up to 49 percent.” Essar said in a statement Thursday.

The proposed transaction is conditional upon various factors such as due diligence, determination of the transaction price, execution of definitive transaction documents and receipt of requisite approvals, Essar added.

Essar Oil is a fully integrated oil & gas company of international scale with strong presence across the hydrocarbon value chain from exploration & production to refining and oil retail. Essar Oil owns India’s second largest single site refinery having a capacity of 20 MMTPA and complexity of 11.8, which is amongst the highest globally. It has a portfolio of onshore and offshore oil & gas blocks with about 1.7 billion barrels of oil equivalent in reserves & resources.

Mumbai based Essar Oil in April said it has become India's biggest CBM producer when output from its Raniganj block crossed 0.5 million standard cubic metres per day (scmd). Located in West Bengal state, Raniganj block, which is company's flagship asset, has already achieved production of 0.62 million scmd. The company aims to boost coal bed methane (CBM) production in India by four times. While nearly 100 wells have been already placed on gas production, an additional 155 wells have been drilled and are at various stages of the hydrofracking-completion-dewatering cycle for further production ramp up.