Essar Oil on Sunday said it is planning combined investments of Rs. 1,600 crore over the next three years to boost refining margins. The latest round of investment, worth Rs. 1,200 crore, has been marked to upgrade its Vadinar oil refinery in Gujarat.
The company's Vadinar refinery, which has a capacity of 20 mtpa, is looking at earning an additional $1.50 (per barrel of crude) on its Gross Refinery Margin (GRM) on the back of the planned investments.
"We have already invested Rs. 400 crore during a 28-day planned shutdown of the refinery in September-October last year. A further Rs. 1,200 crore will be invested to make additional upgrades in the various refinery units over the next 2-3 years," Lalit Kumar Gupta, the Managing Director and CEO, said in a statement.
"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," Gupta added.
The new project will be funded through internal accruals. The Mumbai-based Essar Oil will invest Rs. 1,200 crore to upgrade its naphtha hydro treater (NHT), isomerisation unit, continuous catalytic reformer (CCR) units and also facilities for further recovery of sulphur to further improve its margins.
Essar Oil has a portfolio of onshore and offshore oil and gas blocks, with about 1.7 billion barrels of oil equivalent in reserves and resources. The oil refiner generates $1 billion in terms of Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA).
On June 20 it was reported that Essar Oil is planning to double its petrol retail outlets to 4,300 over the next one-and-a-half years. The planned retail outlet expansion would involve an initial investment of Rs. 2,500 crore by petrol pump owners.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]