Essar Oil has decided to further enhance the capacity of its Vadinar refinery to 20 million tonnes per annum (MMTPA).

The Vadinar refinery’s current nameplate capacity is 10.5 MTPA and it is consistently operating at a throughput of 14 MTPA, or three lakh barrels per stream day (bpsd).

The company is currently implementing a project to expand this capacity to 18 MMTPA (375,000 bpsd), as part of the Phase I expansion of the refinery.

As on October 31, 2010, the Phase I expansion was 72% complete and is on track for mechanical completion by March 2011, with the exception of two units that are delayed by a quarter.

The company has now decided to further expand the refinery’s capacity by 2 million tonnes to 20 million tonnes. This will be achieved through optimisation of some of the refinery units at an estimated cost of $380m.

The project will be completed by September 2012. The move follows a detailed project review that identified several opportunities to de-bottleneck the refinery and revamp some of the units at an extremely competitive capital cost.

The optimisation project entails the revamp of six refinery units: FCCU (Fluid Catalytic Cracking Unit), DHDS (Diesel Hydro Desulphurisation) Unit, SWSU (Sour Water Stripping Unit), DHDT (Diesel Hydrotreater), VGO-HDT (Vacuum Gas Oil Hydrotreater) and DCU (Delayed Coker Unit).

Essar Oil MD and CEO Naresh Nayyar said there has been a significant growth in Indian demand for petro products in the last few years and Essar Oil sees the trend continuing over the next few years.

"Augmenting our refining capacity by an additional 2 million tonnes per annum will help us capture this growing demand at a very competitive capital cost. Based on our internal studies, the optimisation project is expected to result in a very strong economic performance for the refinery," Nayyar said.