23-12-09 Ruias-owned Essar Oil is set to emerge as India's third largest oil refining company and one of the most complex refineries worldwide after it completes expansion of its Vadinar unit, according to an analyst report.
Essar is raising the Vadinar refinery capacity to 16 mm tons from 10.5 mm tons by December 2010 and further to 34 mm tons in Phase-II expansion to be completed by December 2011, making it the country's third largest refining company after Reliance Industries and Indian Oil Corp (IOC).

The report, issued by local brokerage HDFC Securities, said the expansions would help the firm earn about $ 3 more on processing of every barrel of crude oil.
"While refinery expansions will result in $ 3 per barrel premium over Singapore complex GRM (gross refining margin or earnings on processing of per barrel of crude), strategic focus on product evacuation will help maintain high capacity utilization," it said.

After the expansion, Vadinar refinery in Gujarat would be able to process mostof the dirty and difficult crudes that are sold at substantial discounts to premium crude like Bonny Light or Brent. Its complexity index (a measure of the refinery's capability of process difficult crude) will rise from existing 6.1 to 11.8 in 2011-12 and to 12.8 in 2012-13.
"EBITDA margins will rise from 3.1 % in FY09 to above 10 % from FY13E," the report said.