Essar Oil to upgrade Vadinar refinery
Essar Oil Ltd.’s 20 MMtpy Vadinar refinery is looking at earning an additional $1.50/bbl crude on its gross refinery margin (GRM). The company began the upgrades during a 28-day planned shutdown of the refinery in September-October last year. Additional upgrades in the various refinery units over the next 2-3 years.
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 Vacuum Gas Oil (VGO) production into higher margin products.
According to Mr 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.”
Over the next 2-3 years, Essar Oil will upgrade its naphtha hydro treater (NHT), isomerisation unit, continuous catalytic reformer (CCR) units and also facilities for further recovery of sulfur to further improve its margins.
Refinery margins at Essar Oil have remained continuously above the industry benchmarks. In the quarter ended 30 June, 2016, the CP-GRM of $10.29/bbl (unaudited) bettered the IEA margin for Singapore complex refineries by around $6/bbl.
The shutdown and subsequent investment decisions were taken with an eye on the surging demand for petro products in India over the medium and long term. The Vadinar refinery currently produces about 9% of India’s refining capacity and is also among the world’s most complex refineries. It has processed 91 types of crudes, including the dirtiest crudes available. In less than four years since its commissioning in 2008, the refinery capacity was increased from 10.5 MMtpy to 20 MMtpy, while the complexity was enhanced from 6.1 to 11.8. The refinery is capable of producing high quality Euro IV and V grade products. Its safety record is equally impressive—as of 4th August 2016, the refinery has recorded 3,046 (8.2 years) Lost Time Injury (LTI) free days and 2,631 (7 years) fire free days.
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