Essar Oil defers expansion of Vadinar refinery

Ruias-owned Essar Oil has deferred expansion of its Vadinar refinery in Gujarat by a year but will add the new unit at $400 million less cost than previously projected, its CEO Naresh Nayyar has said.

The Vadinar refinery, situated five kilometres away from Reliance Industries twin refineries in the Jamnagar district, will reach 13 million tonnes a year capacity this month from 12.5 million tonnes currently, Nayyar told reporters here.

It will further be expanded to 16 million tonnes at an investment of Rs 7,810 crore by de-bottlenecking by December 2010, six months later than previously anticipated. In Phase- II, a new 18 million tonnes a year processing unit will be set up at close to $4 billion investment by December 2011, a year later than the previously anticipated deadline.

"We had previously projected a total cost of $6 billion (for both phases) but will now complete the project at much lesser investment because of dip in price of metals particularly steel, nickle, copper and aluminium," he said.

Essar expects global demand to pick up by the time Vadinar is expanded to 34 million tonnes.

After the expansion, the refinery will be able to process almost every king of crude oil currently available in the world and produce products that conform to all international standards like Euro V and US Spec and CARBS.

The firm sells 78 per cent of the fuel in domestic markets but exports will rise substantially after the expansion, he said.