Essar Oil completes Vadinar refinery expansion

Essar Oil today announced completion of Rs 8,300-crore expansion of its Vadinar oil refinery in Gujarat that will boost company's turnover by 30-35%, besides improving margins.

"With this (expansion), Vadinar is now in league of most complex refineries in the world. It is now capable of turning most difficult and dirty crude oil into high-quality fuel," Essar Oil Managing Director and CEO LK Gupta said.

Vadinar Refinery is now India's second largest single- location refinery, with an annual capacity of 18 million tonne (up from 14 million tonne currently) and a complexity of 11.8, which also makes it among the world's most complex refineries.

The capacity expansion and complexity enhancement gives the Vadinar Refinery the capability to process much heavier crude, which are cheaper.

The share of ultra heavy crude, which constitute 20% of crude basket now, will go up to 60%; and as a result the overall share of heavy and ultra heavy crude will go up to 80% of the refinery's total crude basket, he said.

"We now have capability to produce Euro IV and Euro V grade petrol and diesel," Gupta said adding 40% of the fuel produced would be exported.

He said processing heavy and ultra heavy crudes, which are cheaper, would "certainly improve our margins, after the expansion our turnover will increase 30-35%."

Essar Oil has entered into long-term contracts with global suppliers, including several national oil companies from Latin America for buying heavy and ultra heavy crude.

"In terms of product yield, the Vadinar Refinery now has the flexibility to produce higher value, high-quality products, including gasoline (petrol) and gasoil (diesel) conforming to Euro IV and V norms, that have growing acceptance in both domestic and international markets," a company statement said.

Close to 80% of its production will now be of valuable light and middle distillates; and 50% of the production of diesel and petrol will meet Euro IV and Euro V specifications.

"Essar Oil is targeting newer markets like Australia, New Zealand and north-west Europe, in addition to countries in the Indian subcontinent for exporting high quality fuels. However Essar Oil will continue to market a majority of its products in the domestic market," the statement said.