Essar Energy plc, the India-focused integrated energy company, announced that Essar Oil Ltd. has successfully commissioned diesel hydrotreater unit 1 (DHDT-1) as part of the Phase I expansion at its Vadinar refinery in India.
Three units remain to be commissioned as part of the Phase I expansion, which is firmly on track to be completed by the end of March.
The Phase I project involves the addition of nine new units and an expansion of the refinery's capacity to 18 million metric tpy (or 375,000 bpd). The project will enhance the refinerys complexity to 11.8 from 6.1.
With this commissioning, Essar Oils capital expenditure program is beginning to taper down. The refinery expansion will deliver a substantial pickup in revenues and profitability for the company going forward.
The DHDT-1 unit, which has a capacity of 4 million tpy, will upgrade diesel quality by treating the sour diesel streams, thus achieving a sulfur content reduction along with a higher cetane index for treated products.
The new unit will also ensure that Vadinar refinery diesel product meets Euro V specifications, as required in the European Union since 2009. The market for low-sulfur fuel is rapidly expanding, with 20 top Indian cities now requiring Euro IV-compliant fuels.
Essar Oil has already commissioned the new isomerization unit at Vadinar. The first Phase I expansion will further enhance this refinery to produce high-octane and near-zero-sulfur gasoline.
L. K. Gupta, managing director and chief executive officer of Essar Oil, said, "We have now commissioned two key units that will help us produce diesel and petrol conforming to international standards. We are very close to delivering the scale that we had set out to achieve for the Vadinar refinery. The increased complexity that we will have post-expansion will give us greater flexibility to produce higher-value fuels that have a growing market both in India and overseas."Alongside the Phase I expansion, an additional optimization project is underway at the Vadinar refinery, which will further increase capacity to 20 million metric tpy (405,000 bpd) by September 2012.
The capacity expansion, complexity enhancement and subsequent optimization will give the refinery the capability to process over 80% heavy and ultra-heavy crudes, which are lower in cost than light crudes.
In terms of product yield, the expanded Vadinar refinery will have the flexibility to produce higher-value products, including petroleum coke.