The India-focused company has until April 1 to sign a the final agreement or pay a $50 million break fee. Shell has agreed to pay a fee of $10 million if it breaks off the deal.
Essar's statement Friday said it was paying $350 million for the refinery and some $780 million for its onsite inventory.
They also agreed to an exclusive 5-year supply of crude by Shell. Essar will enter into long-term contracts with the Anglo-Dutch company for the sale of its products amounting to more than half the refinery's production, including diesel, aviation fuel and petrol.