Essar Oil commences production at its 10.5 million tonne refinery

Essar Oil Ltd on November 24, 2006 has announced the successful start up of Operations at its petroleum refinery at Vadinar in Gujarat, India.

The plant will start its trial production with a capacity of 7.5 million tonnes per annum of crude which will gradually go up to 10.5 million tonnes per annum. This current phase of commissioning comes four months ahead of the originally scheduled date of commissioning, i.e. March 31, 2007. The Company expects to attain production at full capacity in the next two quarters.

The Company said that the project cost of Rs 10,826 crore (USD 2.4 billion) is extremely competitive and lower than estimated costs for a green field refinery.

The Refinery has been built with state-of-the-art, contemporary technology and will have the capability to produce petrol and diesel suitable for use in India as well as advanced international markets. It will also produce LPG, Naphtha, light diesel oil, aviation turbine fuel and kerosene. It has been designed to handle a diverse range of crude - from sweet to sour and light to heavy.

Shri. Shashi Ruia, Chairman, Essar Group said. "We are delighted at the successful commissioning of Essar Oil’s Refinery at a time when India is strengthening its presence in global markets and integrating with the global economy. The refinery signals our commitment to the nation to be a strong and dominant force in core sectors of the Indian economy. The early commissioning is also a tribute to the employees of the Essar Group and its business associates for their unstinted efforts".

The refinery comes at a most opportune time and will fulfil the gap between worldwide demand and supply in the petroleum sector. Currently, refineries the world over, are operating at over 98 percent capacity utilisation. Significantly, there has been, no addition to refining capacities in the last three years and planned new capacities are not expected to come up before the end of 2008.

Essar Oil's refinery is supported by dedicated infrastructure that includes utilities, terminals, crude intake and product evacuation facilities. These include:

Vadinar Oil Terminal, which has an integrated facility to receive crude through a Single Point Mooring system and dispatch of finished petroleum products through its product jetty. The Terminal can handle 32 million tonnes per annum of crude intake with a capability of handling tankers up to 350,000 DWT and product dispatch facilities with an annual capacity of 14 million tonnes. The Terminal includes a port, a tank farm, associated pipeline network and storage & dispatch facilities. The Terminal has been built at a cost of Rs 2,857 crore (USD 635 million).

Vadinar Power Company, which generates 120 MW of power at its co-generation plant and feeds both power and process steam for the refinery.

Essar constructions had a major role in the engineering, planning and construction of the entire refinery and had meticulously planned and executed the entire project in record time. Essar Constructions has over 1000 highly qualified technical and skilled manpower, besides the 16,000 people who worked at the refinery site during the project phase. The Essar Group believes that the synergies and advantages of the construction business have been a distinct advantage in building this petroleum complex.

Marketing:

The Company's products will have a ready market both internationally and in India. The ideal location of the refinery near the Vadinar port ensures easy access to all international markets including Europe and the USA.

The Company's strategy of commissioning its retail outlet in advance of the commissioning of the refinery ensures a ready outlet for its products in India. The Company will also be in a position to supply to bulk consumers. The Company has already commissioned over 900 retail outlets and expects to have 1500 outlets fully operational by the end of March 2007.

Source : Equity Bulls

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