The Hindu : Business : Essar Oil plans to treble capacity

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Saturday, Nov 17, 2007
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Essar Oil plans to treble capacity

Special Correspondent

Expansion will cost $6 billion; board approves global depository shares issue

MUMBAI: Essar Oil has announced plans to increase the capacity of its refinery at Vadinar from 10.5 million tonnes (220,000 bbl a day) to 34 million tonnes annually (700,000 bbl a day). The expansion is being carried out at a cost of about $6 billion (Rs. 24,000 crore).

In order to meet part of the requirement of funds for the expansion and other corporate purposes, including the existing debt of the company, the directors who met here on Friday, approved the issue of global depository shares (GDS) to the promoters / promoter group on a preferential basis, up to a maximum of $2 billion at an effective price of Rs. 200 per share for the underlying equity shares, subject to receipt of shareholders’ and regulatory approvals. The promoters have also informed the company that they no longer intend to proceed with the delisting of equity shares of the company from the stock exchanges. According to a company statement, the present installed capacity of the refinery was established at an investment of about $3 billion (Rs. 12,000 crore) and was commissioned in November 2006. It has been operating at a capacity of about 7.5 million tonnes. The fluid catalytic conversion unit (FCCU) and diesel hydro de-sulphuriser unit (DHDS) to be fully operational shortly, will enable the refinery to reach its full capacity. The company will be expanding its capacity progressively to 34 million tpa by 2010. The first stage of expansion will involve de-bottlenecking and the addition of more sophisticated bottom upgrading units such as delayed coker. The second phase will see a new set of distillation units, including addition of all secondary units and another coker. According to the company, on completion of the expansion, the refinery will produce petroleum products of high quality meeting the most stringent environmental norms, that is, Euro IV and Euro V internationally.

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