Project will help utilise naphtha production from refinery
The company was not considering petrochemicals foray in locations other than Vadinar.
It is close to achieving financial closure for the $6-billion refinery expansion project.
Pratim Ranjan Bose
Kolkata, May 1
To create a fully integrated energy company, Essar Oil will firm up its plans on setting up a petrochemicals facility at its refinery complex at Vadinar in Gujarat, later this year.
The petrochem project would help Essar to utilise the naphtha production in tapping the further downstream opportunities.
Mr Naresh Nayyar, Managing Director, Essar Oil, told Business Line that the company was considering a proposal for gainful use of two-three million tonne (mt) of naphtha to be produced by the Vadinar refinery once the refining capacity is expanded to 34 mt in 2010.
“There is business logic in having petrochemicals facility at Vadinar. We will consider the proposal regarding petrochemicals and firm up our plans, this year,” Mr Nayyar said. He, however, stressed that the company was not considering petrochemicals foray in locations other than Vadinar.
Meanwhile, Essar is making steady progress towards achieving financial closure for the $6-billion refinery expansion project. Of the total projected loan portfolio nearly half is tied up and the rest is expected to be firmed-up shortly.
“We are hopeful to place firm orders for all the critical equipment by May,” Mr Nayyar said. The equipment would be delivered in 16-18 months.
Consolidation of E&P biz
Essar expected to complete the consolidation of its E&P assets under Essar Exploration and Production Ltd – a wholly owned subsidiary of Essar Oil – by this month.
“Some of the exploratory interests of the group are still held by Essar Energy Holding. We are hopeful to complete the consolidation process by May,” Mr Nayyar said.
After the restructuring, Essar Oil would be the umbrella company for Essar’s interests in hydrocarbon sector.
According to him, Essar E&P is expected to supply approximately 30 per cent of the company’s total crude oil requirement – estimated at 1 million barrels a day — in the next seven or eight years. Of the total crude requirement, Vadinar will consume 7,00,000 barrels.
“We are not looking at acquisition of any producing asset, due to the prohibitive cost of oil equity, at this juncture,” he added.