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Essar completes lucrative Indian refinery upgrade

30th March 2012

Essar expansion project could boost Indian refinery turnover by up to 35 per cent

Vadinar Refinery can now product Euro IV and V standard fuels for export

Essar Oil today has completed a USD 18bn expansion of its Gujarat-based refinery which should boost crude capacity to 80 per cent and increase the company’s turnover by a third. Almost half of the fuel will be exported.

Capacity of the Vadinar Refinery has been increased from 14m tonnes to 18m tons, making it India's second largest single- location refinery. It also now has a complexity of 11.8, which also makes it among the world's most complex refineries, according to Essar.

“Vadinar is now in league of most complex refineries in the world. It is now capable of turning most difficult and dirty crude oil into high-quality fuel," said Essar Oil Managing Director and CEO L K Gupta.
 
The capacity expansion and complexity enhancement gives the Vadinar Refinery the capability to process much heavier crude, which is cheaper.

The share of ultra heavy crude, which constitute 20 per cent of crude basket now, will go up to 60 per cent; and as a result the overall share of heavy and ultra heavy crude will go up to 80 per cent of the refinery's total crude basket, according to a statement by Essar.

The refinery also now has the capability to produce Euro IV and Euro V grade petrol and diesel, which are becoming more commonly accepted international and domestic standards. 
 
Processing heavy and ultra heavy crudes would "certainly improve our margins ... after the expansion our turnover will increase 30-35 per cent,” Essar Oil Managing Director and CEO L K Gupta told India’s Economic Times.

Essar Oil has entered into long-term contracts with global suppliers, including several national oil companies from Latin America for buying heavy and ultra heavy crude. Almost half of the fuel produced by the refinery will be exported.

"Essar Oil is targeting newer markets like 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," said Essar in a statement.

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