Essar may emerge as third-largest refiner

MUMBAI: Ruias-owned Essar Oil is set to emerge as India's third-largest oil refiner within two years from its current fifth position in the pecking order, according to an analyst report.

Essar Oil is scaling up its refining capacity at its plant at Vadinar in Gujarat from 10.5 million tonnes to 16 million tonnes by December 2010 and further to 34 million tonnes by December 2011, making it the country’s third-largest refining company after Reliance Industries and Indian Oil (IOC), said local brokerage HDFC Securities.

Mumbai-based Essar Oil, which now lags behind BPCL and HPCL in terms of refining capacity, will surge ahead of the state-run refiners after the completion of its expansion plans.

“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 utilisation,” said the brokerage report.