Essar Oil Ltd., a subsidiary of Essar Energy PLC, plans to invest another 12 billion rupees on projects aimed at helping to raise the gross refinery margin (GRM) of its 20 million-tonne/year Vadinar refinery in Gujarat, India.
Capital projects under the investment combined with the company’s earlier investment of 4 billion rupees on projects executed during a September-October 2015 turnaround will position the refinery to increase its GRM by $1.50/bbl, Essar Oil said.
Due to be completed within the next 2-3 years, the projects will involve upgrades to Vadinar’s naphtha hydrotreater, isomerization unit, continuous catalytic reforming units, and sulfur recovery units, the company said.
The total 16 billion-rupee investment program comes as part of the company’s strategy to meet a surge in India’s medium- and long-term demand for finished petroleum products, the company said.
Alongside routine inspection and maintenance work, the 2015 turnaround included work to complete the refinery’s diesel maximization project—a two-part project that involved conversion of the refinery’s vacuum gas oil hydrotreating (VGO) unit into a mild hydrocracking (MH) unit—as well as the addition of installations in Vadinar’s diesel hydrotreating unit to expand its processing capabilities (OGJ Online, Oct. 21, 2015).
The turnaround also included replacement of many of Vadinar’s piping with pipelines of higher metallurgy in order to increase the refinery’s ability to process crudes with higher total acid numbers (TAN).
Designed to enable the Vadinar complex to convert lower-margin VGO into high-value distillates like diesel and kerosine, the 2015 VGOH-MH unit conversion project came as part of Essar’s Optima Plus program, which involves of series of low-capex and short-gestation optimization projects across the company’s refinery and marketing value chain.
Since concluding the 2015 turnaround, the refinery has been able to modify its crude blend to process higher quantities of ultraheavy and high-TAN crudes and convert its entire VGO production to increase output of high-value distillates, said Chakrapany Manoharan Manoharan, Essar Oil’s director of refining.
Essar Oil’s refinery margins have remained continuously above industry benchmarks, ending this year’s second quarter at current price (CP) GRM of $10.29/bbl (unaudited), or about a $6/bbl above the International Energy Agency benchmark margin for Singapore complex refineries, the Indian operator said.
During fiscal year 2014-15, the Vadinar refinery delivered its highest-ever CP GRM of $8.37/bbl, which was a premium of $8.12/bbl above benchmark IEA margins, Essar Oil said in its most recent annual report.
Commissioned in 2008 and representing about 9% of India’s total refining capacity, the Vadinar refinery completed a $1.81-billion expansion in 2012 that increased capacity from 10.5 million tpy to its current 20 million-tpy capacity (OGJ Online, June 8, 2012).
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