Essar Oil to further raise Vadinar refinery capacity

• Optimisation project being undertaken to enhance capacity by 2 million tonnes, which will be in addition to the 18 million tonnes that will be achieved post Phase I expansion
• Project aimed at capturing growing demand for petro products in India
• Phase I expansion of refinery to 18 million tonnes on track

Essar Oil Ltd (EOL) has decided to undertake a project to further enhance the capacity of its Vadinar refinery to 20 million tonnes per annum (MMTPA).

Essar Oil currently operates a refinery in Vadinar, Gujarat, with nameplate capacity of 10.5 MMTPA. The refinery is consistently operating at a throughput of 14 MMTPA, or 300,000 bpsd (barrels per stream day). The company is currently implementing a project to expand this capacity to 18 MMTPA (375,000 bpsd), as part of the Phase I expansion of the refinery. As on October 31, 2010, the Phase I expansion was 72 per cent complete and is on track for mechanical completion by March 2011, with the exception of two units that are delayed by a quarter.

The company has now decided to further expand the refinery’s capacity by 2 million tonnes to 20 million tonnes. This will be achieved through optimisation of some of the refinery units at an estimated cost of Rs 1,700 crore (USD 380 million); the project will be completed by September 2012. The move follows a detailed project review that identified several opportunities to de-bottleneck the refinery and revamp some of the units at an extremely competitive capital cost.

The optimisation project entails the revamp of six refinery units: FCCU (Fluid Catalytic Cracking Unit), DHDS (Diesel Hydro Desulphurisation) Unit, SWSU (Sour Water Stripping Unit), DHDT (Diesel Hydrotreater), VGO-HDT (Vacuum Gas Oil Hydrotreater) and DCU (Delayed Coker Unit).

Commenting on the optimisation project, Naresh Nayyar, MD & CEO of Essar Oil, said: “There has been a significant growth in Indian demand for petro products in the last few years and we see the trend continuing over the next few years. Augmenting our refining capacity by an additional 2 million tonnes per annum will help us capture this growing demand at a very competitive capital cost. Based on our internal studies, the optimisation project is expected to result in a very strong economic performance for the refinery.”

About Essar Oil
Essar Oil is a fully integrated oil & gas company of international scale with strong presence across the hydrocarbon value chain from exploration & production to oil retail. It has a global portfolio of onshore and offshore oil & gas blocks, with about 45,000 sq km available for exploration. Essar Oil has over 300,000 bpsd (barrels per stream-day) of crude refining capacity that is being expanded to 375,000 bpsd. There are over 1,300 Essar-branded oil retail outlets in various parts of India.

About Essar Group
The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports & Logistics, Construction, and Mining & Minerals. With operations in more than 20 countries across five continents, the Group employs 65,000 people, with revenues of USD 15 billion.