29-03-2012

Essar oil completes refinery expansion project

Essar Oil Ltd today announced the completion of the Rs 8,300-crore expansion of its Vadinar Refinery with the successful commissioning of the final Delayed Coker Unit (DCU), which is amongst the world's largest. The Vadinar Refinery is now India's second largest single-location refinery, with an annual capacity of 18 million tonnes (375,000 barrels per day) and a complexity of 11.8, which also makes it among the world's most complex refineries.

The capacity expansion and complexity enhancement gives the Vadinar Refinery the capability to process much heavier crude diet. The share of ultra heavy crude, which currently constitute 20% of crude basket, will go up to 60%; and as a result the overall share of heavy and ultra heavy crude will go upto 80% of the refinery's total crude basket. The company has already entered into long-term crude sourcing contract 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 norms, 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 50% of the production of gas oil (diesel) and gasoline (petrol) will meet Euro IV and Euro V specifications. EOL 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 a majority of its products in the domestic market.

The Vadinar Refinery benefits from a 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. 

Prashant Ruia said: "We are delighted to announce the completion of the refinery expansion program. This expansion will greatly improve our product offering, margins and competitiveness. Our capital expenditure programmer is now nearing an end. We have invested close to $5 billion till date in the refinery complex and our cost per complexity barrel is one of the lowest in the industry."

Naresh Nayyar, CEO of Essar Energy, said: "After starting commercial production just four years ago, we are proud of achieving a size and scale that can match the best in the world. It underlines our commitment to building a world-class, integrated, low-cost energy company that is focused on India's energy growth story."

LK Gupta, MD & CEO, Essar Oil, said, "The timely completion of our expansion project is  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 to bring this dream project to life."

The Rs 8,300-crore refinery expansion project was implemented using the Group's in-house capabilities. Construction and overall project management, for instance, was managed by Essar Projects. 

The DCU is a key addition to any modern refinery because of its ability to convert bottom-of-the-barrel vacuum residue into valuable products like gasoline (petrol), gas oil (diesel) and VGO (vacuum gas oil). It has a capacity of 7.5 MMTPA, and is licensed by CB&I Lummus. The DCU at the Vadinar Refinery is not only among the world's largest units of its kind but also one of the most advanced to be used in any refinery worldwide, giving the company a higher flexibility to process heavy and ultra heavy crude and produce high-value products.

Alongside the expansion, an optimization project is also underway at the Vadinar Refinery that will further increase the capacity to 20 MMTPA (405,000 bpd) by September 2012.