Essar Oil Completes Vadinar Optimisation Project; Capacity Increased To 20MMTPA

abarrelfullabarrelfull wrote on 15 Jun 2012 13:09
Tags: asia essar india refinery

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Essar Energy plc [LSE: ESSR], the India-focused integrated energy company, today announced that its subsidiary Essar Oil Ltd, India’s second largest private refiner, had completed its Optimisation Project, which has taken the capacity of its Vadinar Refinery in Gujarat to 20 MMTPA, or 405,000 barrels per day. The Optimisation Project has been completed four months ahead of schedule.

Essar Oil completed the Refinery Phase 1 Expansion Project, to raise its nameplate capacity
to 18MMTPA from 10.5 MMTPA, on March 29th 2012, with an investment of c.US$1.85 billion. For the Optimisation Project, Essar Oil invested an additional c.US$380 million, taking the total investment at the Vadinar Refinery to c.US$5.0 billion. The company now accounts for about 10 per cent of India’s total refining capacity.

Essar Oil has completed the refinery at a low capital cost of US$12,746 per barrel, which is around half the global average. Operating costs of US$3 per barrel are also amongst the lowest globally.

“We are very happy to announce the completion of our Optimisation Project much ahead of schedule. This is a testimony to the untiring commitment of the Essar Oil team as well as teams from other Essar Group companies who worked seamlessly under highly demanding conditions. With this commissioning, our capex cycle has now come to an end and we are fully geared to deliver the value of our investments to all our stakeholders,” said Lalit Gupta, MD & CEO, Essar Oil.

“It is a proud moment for us as we have proved our mettle by commissioning and stabilising production of such a large facility in a record time and ahead of schedule. Our operating costs are amongst the lowest worldwide and with the completion of Optimisation Project we have significantly moved up in the refining value chain,” said C. Manoharan, Director – Refinery, Essar Oil.

Under the Optimisation Project, a redundant Visbreaker Unit was converted into a Crude Distillate Unit to process ultra heavy / tough crude on a standalone basis, which will drive a significant improvement in economics. Secondary units required to support the additional throughput along with other supporting infrastructure (pipelines, tankages, blending facility etc.) were also completed as a part of Optimisation Project.

The Vadinar Refinery now has the capability to process a much heavier crude diet. The share of ultra heavy crude will go up to 60%, and as a result, the overall share of heavy and ultra heavy crude will increase to 80% of the refinery's total crude basket. The company has already entered into long-term crude sourcing contracts with global suppliers, including several national oil companies from Latin America.

In terms of product yield, the Vadinar Refinery now has the flexibility to produce higher value, high-quality products, including gasoline (petrol) and gas oil (diesel) conforming to Euro IV and Euro V standards, that have growing acceptance in both domestic and international markets. Close to 80% of its production will now be of valuable light and middle distillates; and more than 50% of the production of gas oil (diesel) and gasoline (petrol) will meet Euro IV and Euro V specifications. Essar Oil is targeting newer markets such as 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 the majority of its products in the domestic market.

The Vadinar refinery benefits from fully integrated infrastructure including India’s only captive coal fired power plant (nearing completion) to provide power and process steam, a port, pipelines and tankage with multi modal product dispatch facilities through rail, road, and sea, giving it a unique cost advantage.

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