Jamnagar (Gujarat), June 6 (ANI): Essar Oil has completed its Jamnagar optimisation project ahead of schedule.
It has successfully increased capacity at its Vadinar refinery from 18 million tons to 20 million tons ahead of the deadline.
Essar Oil Limited (EOL) is engaged in the exploration and production of oil and gas, refining of crude oil, and marketing of petroleum products.
It operates in three segments: refining, including expansion and marketing; exploration and production activities and others.
Essar Oil Limited MD and CEO Lalit Kumar Gupta told reporters here that it was proud day for the refinery and the company.
"Today is a proud day for Essar Oil. We have declared completion of our 20 million tonnes refinery that means we have completed our optimisation project four months ahead of schedule which has taken our refinery capacity from 18 million tonnes to 20 million tonnes," said Gupta.
Essar had completed a 1.6 billion dollar overhaul and expansion at the Vadinar refinery, raising capacity to around 360,000 barrels per day from 280,000 bpd and adding units that can process cheaper, heavier crude into fuels.
The refinery would reach 400,000 bpd capacities in September, Gupta said.
Gupta also said that devaluation of rupee would lead to incremental rupee earnings as the earnings of the oil companies are in dollars.
"For any company where the earnings are in dollars any devaluation of rupee helps. Since the earnings of refineries that is GRMs are in dollars, so any devaluation of rupee definitely leads to incremental rupee earnings and to the extent that we have the rupee on our balance sheet that gets when we convert into dollars because earnings are in dollars, that gets devalued," he added.
He added that due to the increase in capacity, they would now able to cater to the world market.
"Our first focus is to supply to our local markets then we can supply and our market will be the entire world because we can produce right from the lower grade to the highest grade and naturally we will produce highest grade because they will give us more margins," he added.
Essar had earlier forecast a 35 percent jump in revenues for the fiscal year that started on April 1. Revenues for the previous fiscal year were around 9.5 billion dollars.
Essar plans to sell a stake of around 15 percent by June 2013, as required by the Securities and Exchange Board of India (SEBI) to reduce the stake held by founding shareholders to 75 percent from nearly 90 percent now.
The company believes its shares are trading below value and the price will improve after investors see it operate the newly expanded refinery for two quarters, Gupta said.
Essar Oil's market valuation stands at 1.3 billion dollars and its shares have barely changed so far in 2012, closing on Thursday at 50 rupees a share, a fraction of the peak in 2008 of nearly 356 rupees.
Essar, 87 percent owned by London-listed Essar Energy, is one of only two private refiners in India.
The company is currently negotiating with the government in Gujarat more time to repay a 1.24 billion dollars sales tax due after the Supreme Court dismissed Essar's petition seeking a review of an earlier verdict to defer payment.
Essar will be able to use heavy crude for almost 80 percent of its capacity and is gradually shifting to Latin American oil from Venezuela, Colombia, Mexico and Brazil.
Essar is also reducing dependence on oil from Iran, its single largest supplier, in line with plans by other Indian refiners as international sanctions target the flow of Iran's exports.
The U.S. and its allies aim to reduce Iran's oil revenues to pressure Tehran not to build nuclear weapons.
Iranian crude would account for around 25 percent of Essar's supplies when the expansion was completed, down from around 40 percent, he added.
Industry sources have told Reuters Essar plans to cut 15 percent from its 100, 0000 bpd contract, which runs from April 2012 for a year. Gupta declined to comment.
Earlier this month, data published by a leading industry consultant showed India has vaulted to the top of the list of Iran's oil customers, overtaking China, in a first-quarter buying surge ahead of tighter sanctions against Tehran this summer.
India's Iranian crude imports could fall around 25 percent from April, when new annual contracts take effect. (ANI)