With many of the world’s oil refineries operating at near capacity, and little prospect of additional refining capabilities being introduced in the next two years, a need has arisen to produce new refining facilities, which are up to intense market demands.
One of India’s largest oil exploration, production and refining companies, Essar Oil, has announced that it will begin operations at its petroleum refinery at Vadinar in Gujarat, India.
Production has started four months ahead of its target date of March 31, 2007, and Essar expects the refinery to reach its full production capacity sometime around the middle of the year.
The plant will initially start its trial production with a capacity of 7.5 million tonnes per annum, which will gradually rise to 10.5 million tonnes.
“We are delighted at the successful commissioning of Essar’s oil refinery at a time when India is strengthening its presence in global markets and integrating with the global economy,” said Shri. Sashi Ruia, chairman of Essar Group.
“The refinery signals our commitment to the nation to be a strong and dominant force in core sectors of the Indian economy. The early commissioning is also a tribute to employees of the Essar Group and its business associates for their unstinted efforts.”
The company said that the production cost of Rs. 10 826 crore (approx. US $2.4 billion) is extremely competitive and lower than estimated costs for a green field refinery.
The new refinery will have the capacity to produce petrol and diesel suitable for use in India as well as international markets and will also produce LPG, Naphtha, light diesel oil, aviation turbine fuel and kerosene. It has been designed to handle a range of crude, from sweet to sour and light to heavy.
The location of the refinery near the Vadinar port will ensure easy access to all international markets, including Europe and the US.
The refinery is expected to help fill the gap between worldwide demand and supply in the petroleum sector as, according to the company, refineries the world over are operating at over 98% of their capacity.
Essar also claim there has been no addition to refining capabilities in the last three years, with planned new capacities not expected to start being fully functional before the end of 2008. Essar has already established a network of 900 retail outlets, and plans to set up a further 2 500 outlets during 2007. This will in turn provide the refinery with a ready outlet to get its products on sale in its own domestic market.
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