We now have flexibility to produce better products: L K Gupta, Essar Oil

Interview with MD & CEO, Essar Oil

Essar Oil has announced expansion of its Vadinar refinery to 18 million tonnes of annual capacity. This makes it the country’s second biggest at a single location. In an e-mail interview, managing director and chief executive officer L K Gupta tells Jyoti Mukul the reliance on Iranian crude oil has decreased. Edited excerpts:

What is the refinery expansion likely to add to the overall portfolio?
The completion is a very important landmark for the organisation. The capacity expansion and complexity enhancement gives Vadinar the flexibility to process a much heavier crude (oil) diet, more than 80 per cent of heavy/ultra heavy crude, available at lower prices and still produce high quality Euro IV/V products, resulting in substantial increase in the refinery margins.

On the products side, we now have the flexibility to produce higher value, high-quality products, including (petrol) and diesel conforming to Euro IV and V norms, that have growing acceptance in both domestic and international markets. Close to 80 per cent of our production will now be of valuable light and middle distillates; and 50 per cent of the production of diesel and petrol will meet Euro IV and Euro V specifications.

How attractive has the refinery margin been this quarter?
With incremental complexity, the refinery margins are expected to be substantially better for Essar Oil. The margins for such complex refineries are expected to be $7-8 over the IEA Singapore margins.

What portion of refinery sales are meant for abroad?
Exports account for 35-40 per cent of the Vadinar refinery’s revenues. Our exports, comprising naphtha and petrol, go into Far East and South Asia.