Essar Oil to invest Rs 1,600 crore to upgrade Vadinar refinery in Gujarat

The country's second largest private sector refiner Essar Oil has chalked out plans to invest Rs 1,600 crore to upgrade its Vadinar refinery in Gujarat and boost gross refining margins over the next two-three years.

"Our 20 MMTPA Vadinar refinery is looking at earning an additional USD 1.50 (per barrel of crude) on its Gross Refining Margin (GRM) on the back of Rs 1,600 crore of investments.

"We have already invested Rs 400 crore during a 28-day planned shutdown of the refinery in September-October last year," Essar Oil Managing Director and CEO Lalit Kumar Gupta told PTI here.

"A further Rs 1,200 crore will be invested to make additional upgrades in the various refinery units over the next 2-3 years," he said. The project will be funded through internal accruals only as company generates USD 1 billion EBIDTA and saves good amount of money every year, Gupta said.

The shutdown or turnaround activity involved not just routine inspection and maintenance, but also entailed the conversion of the VGO-HT unit into a mild hydrocracker (MHC) unit and the setting up of facilities to process High Acid (TAN) crudes.

Ever since, the refinery has been able to convert its entire VGO (vacuum gas oil) production into higher margin products, he said.

Over the next 2-3 years, Essar Oil will invest Rs 1,200 crore to upgrade its naphtha hydro treater (NHT), isomerisation unit, continuous catalytic reformer (CCR) units and also facilities for further recovery of sulphur to improve its margins.

According to C Manoharan, Director-Refinery, Essar Oil, "Post the shutdown, we have been able to modify our crude blend to process higher quantities of ultra-heavy and high TAN crudes, and increase the production of high value distillates.

This has enabled Essar Oil to improve its crude and product mix significantly, which is reflected in our financial performance."