Rejig time

Mumbai, Nov. 16: Essar Oil has decided to triple the capacity of its Vadinar refinery to 34 million tonnes by 2010 at a cost of $6 billion (Rs 24,000 crore).

The expansion will make it the third biggest refinery after the two plants established by Mukesh Ambani-owned companies Reliance Industries and Reliance Petroleum.

At present, the Vadinar refinery has a capacity of 10.5 million tonnes.

The board of Essar Oil today cleared plans to issue Global Depositary Shares to the promoters on a preferential basis at Rs 200 a share to raise $ 2 billion.

The board also decided to call off plans to delist the company’s stock. In January, the Essar group had announced plans to delist Essar Oil and Essar Steel from the stock exchanges. This would have meant that no Essar group company would have been listed on the exchanges.

The existing refinery was set up at a cost of approximately $3 billion. It was commissioned in November 2006 and has been operating at approximately 7.5 million tonnes, the company said in a statement.

The fluid catalystic conversion unit and the diesel hydro-de-sulphuriser units, which will be fully operational shortly, will enable the refinery to reach its full capacity of 10.5 million tonnes. These units will enable Essar Oil to process heavier crudes and meet the stricter international emission norms, the company said.

The first stage of expansion will involve de-bottlenecking and the addition of more sophisticated bottom upgrading units such as delayed coker. The second phase of expansion will see a new set of distillation units, including addition of all secondary units and coker, the company said in its statement.

“The basic engineering design for the expansion has been completed. The equipment will incorporate the latest in technology from well known international suppliers,” a company statement said.

After the completion of the expansion, the refinery is expected to produce high quality petroleum products that also meet most environmental norms.

The Essar Oil stock has run up sharply in the last few days. On Wednesday, when the Bombay Stock Exchange (BSE) saw its biggest one-day rally of 893 points, the Essar Oil stock jumped 58 per cent before settling at Rs 120.80 at the end of the day, a total gain of 36.5 per cent.

Essar Oil shares closed today on the BSE at Rs 192.35, 22 per cent higher than yesterday's close of Rs 157.65.