Essar Oil expects revenue to grow 35% in 2012-13

By : BS Reporter
Last Updated: Fri, Mar 30, 2012 03:37 hrs
Essar Oil to seek approval to raise $1.7bln

Essar Oil expects its revenue to grow 35 per cent in the next financial year, beginning April 1. This would be helped by an improved refining capacity, Managing Director and CEO L K Gupta said on Thursday. Gupta was talking on the sidelines of a press conference to announce the completion of expansion of Essar Oil's Vadinar oil refinery in Gujarat.

"With this (expansion), Vadinar is now in the league of the most complex refineries in the world. It is now capable of turning the most-difficult and dirty crude oil into high-quality fuel," he said.

Essar Oil commissioned the base refinery at Vadinar in November 2006 with a name plate capacity of 10.5 million tonne. In four years, the refinery has doubled its capacity to 18 million tonnes per annum (mtpa) and the complexity to 11.8 from 6.1.

"We have invested Rs 8,300 crore for capacity expansion to 18 mtpa, along with complexity enhancement to 11.8, and are investing another Rs 1,700 crore in the optimisation project that will take capacity to 20 mtpa. The overall capex, therefore, stands at Rs 10,000 crore. Till date, we have invested about $5 billion in the Vadinar refinery complex and we have one of the most complex refineries with world-class capabilities of 20 mtpa (by September 2012) at 11.8 complexity," said Gupta.

The capacity expansion and complexity enhancement will allow the refinery to process heavier crude type, most of which is available in the Latin American countries.

"So, our dependence on Iranian grades and others available in the Asia Pacific and the Persian Gulf regions have come down and it is now gone up significantly towards the Latin American countries," added Essar Energy CEO Naresh Nayyar.

The company has also sought the government's approval to set the price for coal-bed methane (CBM) gas at $4.20 per million British thermal unit (mBtu), Nayyar said.

Essar Oil's Stanlow refinery has been reporting a $2 barrel over north-west European IEA margins. After implementing schemes such as switching boiler from refinery fuel to gas fuel in 2012-13, it would report a $4 per barrel over IEA margins, added Nayyar.

"We have already drilled 73 wells and are waiting for further environment clearance. Our plan is to drill over 200 wells in the next one year and the overall capex envisaged is over Rs 2,500 crore," said Nayyar.

On the sale tax issue, Nayyar said the company has filed a review petition, which is under consideration. "We expect an answer to this shortly. We are also in discussions with the Gujarat government on how do we make this payment, in case the review petition is not admitted," he added.

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