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Certain information included in these Materials relates to reserves, resources, capacity and other technical measurements. Such information is sourced from technical expert reports where possible or Group data. Such information is based on engineering, economic, geological and other technical data assembled and analysed by the Group's staff, including engineers and geologists, and that data in certain cases is reviewed by third parties. There are numerous uncertainties inherent in estimating quantities and qualities in respect of such information, including many factors beyond the Groups control. No assurance can be given that the indicated amount of reserves or resources will be recovered or that the Group's assets can continuously operate at the capacities indicated.
By accepting or accessing the Materials or attending any presentation or delivery of the Materials you agree to be bound by the foregoing limitations and conditions and, in particular, will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this notice. Essar Oil Refining & Marketing Essar Energy Site Visit 1st November 2012 Agenda of Presentation Industry Overview Refinery Business Supporting facilities at Refinery Sales and Marketing Annexure
4 Industry Overview 110 312 165 79 1000 1000 410 316 330 824 227 196 621 960 0 300 600 900 1,200 1,500 1,800 2,100 2009 2010 2011 2012 2013 2014 Asia Africa Europe US Industry Trends 6 6 Global Oil Demand 84.8 86.1 86.3 85.2 88.2 88.9 89.8 90.6 81 83 85 87 89 91 2006 2007 2008 2009 2010 2011 2012 2013 Expected Global Oil Demand has grown by 3.0 mbpd in 2010 one of highest in the history. Demand growth moderated in 2011 to 0.7 mbpd, however, IEA estimates global oil demand to grow by 0.8 to 1.0 mbpd for 2012 & 13. Global demand to grow mainly on account of consumption driven growth in Non OECD countries led by China, India & Middle East. Refinery Closure / Shutdown Expected closure In last 4 years, 4.5 mbpd equivalent refineries closed/ shutdown. Center of gravity has shifted from OECD countries to non-OECD countries as most of refining capacity additions are taking place in non OECD countires. Net refinery capacity additions are sufficient only to meet the incremental oil demand. Additional closures in Europe and US will put upward pressures on refinery margin. Refinery margins are expected to remain robust in Asia in next 2-3yrs. Source: IEA Source: Industry reports mbpd kbpd 7 Crude Prices and Product Cracks Movement in Crude Prices 101 102 107 103 95 82 88 94 95 111 120 127 120 110 95 103 113 113 110 116 122 117 107 94 99 109 111 80 90 100 110 120 130 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 WTI Brent Dubai (US$/bbl) Product Cracks (US$/bbl) 19.43 17.60 17.81 16.26 15.39 19.27 8.52 5.56 2.84 3.36 3.70 4.82 20.36 18.75 18.23 15.56 15.96 20.21 11.66 14.64 7.60 11.76 10.55 12.42 -$10 $0 $10 $20 $30 April - Jun,11 Jul-Sep,11 Oct-Dec, 11 Jan- Mar,12 April - Jun,12 July-Sept,12 Gasoil FO Jet Gasoline Light & Heavy Differentials 2.8 2.5 2.4 3.55 3.3 2.95 2.4 2.4 2.8 5.30 5.50 5.56 6.85 6.76 7.01 6.9 6.8 7.2 8.69 10.74 13.74 12.20 9.50 8.50 11.0 13.0 12.0 0 4 8 12 16 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 AL -AH diff AL - Norooz BL - Maya (US$/bbl.) Benchmark Crude Prices continue to show volatility on account of global economic outlook, geo-politics in Middle East & Africa regions & European crisis. Diff. between Dubai & WTI continue to remain wide & expected to moderate only after reversal of cushing pipeline. Light & heavy difference remains range bound, however, light to heavy & ultra heavy diff. improved, providing incremental margin to highly complex refineries Middle & light dist. continue to remain strong on account of demand from non OECD counties and unplanned shutdown and closures of refineries and low inventories Source : Historical Platts (Singapore cracks) Source : Historical Platts Source : Historical Platts Indian Refinery Capacity Additions & Petro Product Demand 8 Existing Refinery Capacity Total Refining capacity 190 MMTPA 15 6 2 IOC Paradeep, 2014 NOCL, 2014 HPCL / CPCL, 2014 Estimated Capacity Additions Total Refinery Capacity excludes RIL SEZ refinery intended for exports of petro products. No new refinery capacity addition expected in next 3-5 years except as indicated above. HPCLs Maharashtra refinery, Rajasthan refinery & other expansion projects announced by PSUs are not considered as they are still at the early stage of planning. 30% Refining Capacity - over 35 years old Source: Industry ; EOL As on June 2012 Source: Industry mmtpa mmtpa Global Economies Shifting towards cleaner fuels 9 13 Major cities shifted to EURO IV Norms from 2010 and 7 cities added in 2012 Entire Nations is expected to move Euro IV in next 1-2 years and government is planning to implement Euro V in major metro cities. Source: EOL; Industry EOL is well placed to capitalise on growing domestic market (auto fuels ~8%) & demand of cleaner fuels. Demand & Supply Balance of Petro Products 10 -5 -5 -6 -7 -9 -10 -12 -13 -15 3 3 5 4 2 -1 -3 -6 -9 3 3 3 3 2 2 1 1 0 5 8 7 1 -6 -14 -22 -31 -41 -50 -40 -30 -20 -10 0 10 20 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 LPG MS ATF HSD Deficit of Gasoil & Gasoline Note : 1) Last 5 year (demand growth) CAGR replicated for projections. 2) We have assumed the base year as FY2011-12. 3) RIL SEZ assumed to continue in SEZ. 4) We have not considered the PSU refineries which are at conceptual stage.
Million tonnes Source: EOL; Industry Indian Oil and Gas Demand 11 22.3 9.7 5.5 3.7 2.6 1.1 USA EU Russia Brazil China India Per capita oil consumption (annual barrels/person)-2012 Petro product growth in India 83.6 62.7 38.6 3.6 2.8 1.6 Russia USA EU Brazil China India Per capita gas consumption (annual cubic feet/person)- 2012 9.0% 13.9% 11.5% 4.2% 8.5% 8.9% 6.7% 10.3% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2008-09 2009-10 2010-11 April-Sept 2012 Gasoline Growth Gasoil Growth (Diesel) Low per capita oil consumption Low per capita Oil & Gas consumption in India; provides a huge potential to grow at faster pace in order to catch up with developed economies. Petro products demand in India continues to be strong led by growth in GDP, rising disposable income, Govt. focus on development of infrastructure. Gas demand is growing at 20%+ rate, however, this is also restricted due to constrain from supply side. Govt Policy to restrict Gasoil Price has created abnormal demand growth in Gasoil, which has even replaced Fuel Oil & CNG also apart from Gasoline. Low per capita gas consumption www.Indexmundi.com IPR Report www.Indexmundi.com Why refining margins could remain high? Contraction in refinery capacity due to unplanned shutdown : Refinery capacity has contracted due to planned/unplanned refinery shutdown. Market witnessed more than 1.5 mbpd of refinery capacity closure in FY12 & expected likely closure of another 1mbpd for FY13; resulting net refinery capacity addition to be negative in FY13 and with expected demand growth at 0.8mbpd. This would support refinery margins in the near to medium term Global capacity utilisation under pressure : Refinery Utilisation unlikely to rise further due to high average life of refineries and planned/ unplanned shutdown. Low Inventory level: Five-year-low inventory level to provide support to diesel cracks in the coming quarter Strong diesel demand in India : Continuous strong diesel demand in India and Middle East will benefit Asian diesel refiners and will result into healthy refinery margin.
12 Refinery Business Business Structure 14 20 mmtpa refinery at vadinar with complexity of 11.8 Low cost refining complex centred around Vadinar supersite Essar Oil Limited - India Essar Energy Plc 87.10% Upstream Midstream Downstream Leading Indian CBM Portfolio with 10 tcf+ reserves & resources across 5 CBM blocks Total reserves & resources ~ 1.7 mmboe Set up ~ 1600 retail outlets through franchisee model Pan India presence of Retail Outlets Vadinar Refinery 15 Refinery Plot Plan 16 PROCESS PLANTS CCB & LAB UTILITY & POWER PLANT PRODUCT TANKS EFFLUENT TREATMENT PLANT ROAD LOADING DISPATCH TANKS RAIL LOADING FLARE UTILITY & POWER PLANT MAINTENANCE FIRE COKER COOLING TOWERS PRODUCT TANKS Strategic location & Global presence to drive the synergy
17 Crude intake Crude intake
Proximity to the Middle East, the largest crude oil source in the world resulting in lower crude freight costs
Presence in a major maritime route from the Middle East to the Far East
Strategically located to cater the demand of growing domestic market & supply to global markets
Strong, captive infrastructure like port / jetty, power plants of Essar affiliated companies in close proximity
Latin America Major Units and Licensors 18 UNIT / FACILITY CAPACITY (MMTPA) CAPACITY Post OPTIMISATION LICENCER / TECHNOLOGY DETAILED ENGG CDU / VDU* 10.5 (CDU) 7.2 (VDU) 18 (CDU) 10.9 (VDU)
VISBREAKER (VBU) 1.9 2.0 (CDU) NAPHTHA HYDROTREATER (NHT) 1.6 1.8 CONTINUOUS CATALYTIC REFORMER UNIT (CCR) 0.9 1.1 FLUID CATALYTIC CRACKING UNIT / UNSATURATED GAS SEPARATION SECTION (FCCU) 2.9 3.9 DIESEL HYDRODESULFURISATION UNIT (DHDS) 3.7 5.3 VGO HYDROTREATER (VGO HT) - 6.5 DIESEL HYDROTREATER (DHDT) - 4.0 DELAYED COKER UNIT (DCU) - 7.5 ISOMERISATION (ISOM) - 0.7 * Converted to CDU as part of optimisation project. Unique Design Features for Vadinar Refinery 19 Tallest crude column (90 metres height, 76 trays) Excellent swing capabilities CDU Low pressure steam ejectors & vacuum Energy savings VDU Converted to CDU. Capable to process ultra heavy crude on standalone basis. Improved economics Maximum Conversion VBU Very high pressure hydro treatment Capable of producing Euro V diesel DHDT 6 Coker drum of 7.5 MT One of the largest Coker unit in the world Complete bottom of barrel vacuum residue into valuable products. DCU Produces Euro IV/V grade diesel DHDS Produces LPG, Gasoline & Diesel streams Improves overall refinery flexibility FCCU Produces Reformate & Hydrogen Reformate is a key component of Gasoline Hydrogen is used in DHDS NHT/CCR Enables to make the increased proportion of BS- IV and BS-V grade gasoline. Produces high octane Isomerate. Converts Naphtha to Gasoline. ISOM Unit Hydro treat FCC feed to enable refinery to produce premium quality low sulphur, high octane product. VGO-HDT Vadinar Refinery Indias second largest private refinery World class, high complexity refinery 405,000 bpd capacity 11.8 complexity Low capital cost Total cumulative capex : US$5.03 billion Capex per barrel : US$12,746 Capex per complexity barrel : c.US$1,080 Low operating costs c.US$2.8 / bbl Continuous focus on process innovation and optimisation
20 Legends : Indian Private Sector NOC 1 NOC 2 NOC 3 NOC 4 NOC 5 23,000 19,800 26,500 18,000 20,400 10,700 12,746 - 5,000 10,000 15,000 20,000 25,000 30,000 World Average China Saudi Arabia India Indian PSU Refineries Indian Private Sector Essar Energy Vadinar 2 4 6 8 10 12 14 16 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Indian Refineries Capacity (bpd) 11.8 Large scale high complexity refineries C o m p l e x i t y
Source: EOL; Industry Crude Mix and Sourcing Strategy Higher complexity enables processing of ultra heavy & toughest crudes thus overall reduction in crude cost Continuous optimization of crude diet ; 70-80 type of crudes processed in last 4 years. Avg API of crude processed improved to 28 compared to 33 pre expansion, expected to further improve to 25 API upon widening the diff. between light & heavy crude.
21 19% 56% 53% 29% 28% 14% 0% 20% 40% 60% 80% 100% Pre Expansion Post Expansion Light Heavy Ultra Heavy Requirement of ultra heavy crude is around 85 90 million barrel. Substantial qty. of Ultra Heavy crudes tied up from Domestic market ~ 15%-20%, Latin America ~ 35% - 40%, Middle East ~ 30% ~ 40%. Focus has shifted towards Latin American Countries like Venezuela, Brazil, Colombia, Mexico. Term contract with Cairn India to supply 65000 bpd mangala crude from Rajasthan.
Crude Sourcing Strategy 85-90 mmbbl Ultra Heavy Crudes Total requirement ~150 mmbbl 60-65 mmbbl Light & Medium Crude Majority of requirement tied up with term contracts with global & domestic suppliers partly tied up to take the advantage of any opportunity available in the market Source: EOL Product Mix and Evacuation Strategy ~ 83% of product slate is middle and light distillate More than 50% of gasoil & gasoline will be Euro IV & V compliant. Refinery fully capable to convert low value fuel oil into higher value added products. Continue to focus on production of high margin bitumen & fuel oil based on market dynamics.
22 31% 17% 42% 59% 27% 24% 0% 20% 40% 60% 80% 100% Pre Expansion Post Expansion Light Middle Heavy Tied up with PSUs on long term contract for supply of products in domestic market. Executed agreement / MOUs with cement players for supply of Pet coke. High demand of auto fuels in India in last 6 months, resulted 80% domestic sales. We expect to maintain 70% & 30% ratio going forward. High complexity to provide an opportunity to export high quality products for better realistion Leverage the group presence by placing the relevant product in different markets.
Product Evacuation Strategy Domestic Market Export Market LPG, Gasoil, Gasoline, Petcoke Gasoline, VGO, Fuel Oil & Petcoke Source: EOL Saving on account of Coal based Power Plant 23 Coal Based Boilers and Power Plant provides a low cost source of Power and Steam to meet Refinerys demand compared to liquid fuel or natural gas. Post Expansion Projects, Fuel & Loss increased to 8%. With start of Coal based power plant, fuel cost will reduced to 4.5%. Refinery will use Coal for Power plant and Natural Gas for refinery internal processes. This will save around 3%-3.5% of liquid fuel (Fuel Oil & Naphtha), which will be further converted into other value added products. This will save minimum US$ 0.8/bbl for the Refinery. 8% 4.5% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% Fuel & Loss ( based on crude throughput) Pre Coal Power Plant Post Coal Power Plant 1.2 mmscmd of Natural Gas 1.6 Million Tones of Coal Additional Usage of Low cost Coal & Natural Gas in Refinery Source: EOL 10.30 11.60 15.00 12.20 6.60 8.40 8.70 7.60 3.62 1.60 4.53 4.23 4.69 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 FY13 Indian Complex Refinery Vadinar Refinery Significant Gross Refining Margin uplift
24 Increased complexity to provide incremental margins in line with the peers with similar complexity FY12-13, refinery expected to deliver throughput ~ 140 mn bbls FY13-14 throughput ~ 150 mn bbls, resulting in increased GRM. Coal fired power and steam to add ~ US$0.8/ bbl to GRM benefit expected in Q4FY12. ~ US$ 720mn uplift in GRM expected. * Assumed on throughput of 150 mmbbl & subject to market conditions. Vadinar Incremental GRM*
US$/bbl US$ Million Source: EOL; Industry Source :EOL 60 720 540 120 0 200 400 600 800 Capacity Additions Complexity Impact Coal based Power Plant Incremental EBITDA Vadinar Refinery received Refinery of the year Award from Petroleum federation of India. Essar Refinery Integrated Management System(ERIMS) conforms to the requirement of ISO 9001:2008, ISO 14001:2004 & OHSAS 18001:2007 . Awarded first position in Safety, Health & Environment (SHE) Awards for year 2010 in manufacturing sector (large) industries by CII. Gold category award for implementation of the 5S, by the Quality Circle Forum of India. British Safety Council -International Safety Award with Distinction for its Health & Safety performance . Safety excellence award from Federation of Indian Chambers of Commerce & Industry (FICCI) National Award for Excellence in Water Management from Confederation of Indian Industry (CII)
Safe, Reliable & Sustainable operations 25 LTI free Man - days 1643 LTI free Man-hours 13.68 Major fire free days 1228 As on 30 th Sept, 2012 Benchmark study by Solomon 26 11 6 5 4 MAJOR PERFORMANCE INDICATORS 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile EOL is among quartile 1 refineries in 11 of 26 major performance indices among Peer group Some of these are Refinery Utilization Non Energy cash operating expenses Maintenance Index Maintenance cost efficiency Index Turn around index Personnel cost index
ESSAR: 11 OUT OF 26 MAJOR PERFORMANCE INDICATORS IN FIRST QUARTILE Fuel and Loss 27 Received 2 nd Prize for performance in Energy Optimization and Hydrocarbon Loss Management by CHT (under MOPNG) for Jawaharlal Nehru Centenary Awards-2011 Received 3 rd Prize for managing Steam Leaks by CHT (under MOPNG) during Oil and Gas Conservation Fortnight (OGCF- 2011) survey 7.02 6.50 6.05 5.83 6.31 2007-08 2008-09 2009-10 2010-11 2011-12 Year - wise Fuel & Loss Commissioning of expansion units A dedicated energy cell to monitor and optimize energy Case Studies Essar Oil has a capability to produce upto 700 kT/Annum VG 30. This process has been developed in house and which resulted in avoiding the investment for Bitumen Blowing unit. Essar Oil also has capability to produce up to 1500 kT / Annum of LSFO The company has the flexibility to swing the production based on prevailing market conditions. PCS made a feasibility study on the conversion of VBU to CDU and submitted the report . The report identifies modifications needed to convert the VBU to a CDU/VDU at a capacity of 2 MMTPA with 100% Mangala crude oil from Rajasthan After DCU Unit stabilization, VBU Shutdown taken and all modifications carried out and Unit restarted as CDU on 15/06/2012. Unit is running normal now.
28 VG-30 BITUMEN AND LSFO OPTIMIZATION PROJECT VBU TO CDU Sales & Marketing
Downstream sector in India 30 Sector Deregulation in 2002 In March 2002, the Indian Government announced a new policy allowing private sector companies to obtain rights to market automotive fuels and aviation fuels in India, subject to a minimum investment of at least US$392mn in the domestic oil industry infrastructure Commercial sales Commercial sales include sales to domestic industrial customers on a bulk basis, as well as sales to the National Oil Companies These sales are made at Trade Parity prices for Auto fuels and Import Parity Prices for Kerosene and LPG Retail sales As of today the Indian Fuel market is attempting to move towards a total decontrol of pricing having already announced the deregulation of MS Retail outlets owned or controlled by the Indian Government (c.94% of the retail outlets in India) are pricing their petroleum products below cost As a result, private sector oil companies have had to either similarly sell their petroleum products below cost for a loss, or charge higher, non-competitive prices The subsidy mechanisms in place by the government, compensates public sector OMCs for majority of their losses by way of oil bonds and discounts from its upstream E&P companies (ONGC, Oil India and GAIL) Global oil players : Esso, Caltex, Burmah Shell Nationalised : Formation of IOC, BPCL and HPCL Liberalisation: Deregulation, entry of private players such as Essar and Reliance Pricing of Refinery Products 31 Sales Export Petrol / FO / VGO FOB Vadinar PSUs/Bulk HSD / MS Trade Parity Price Kero/LPG Import Parity Price Retail Petrol TPP + Retail Margin HSD Govt regulated Price Trade Parity Price: Import parity (80%) & export parity prices (20%) Import Parity Price: Import price + duties + freight + insurance + transport cost VGO, Pet Coke and Sulhpur prices are determined on the basis of mutual discussions between buyers & sellers while Naphtha prices are based on Refinery Transfer Pricing (RTP) Sales Mix 32 26% 25% 32% 34% 20% 65% 60% 57% 59% 73% 3% 8% 5% 2% 6% 6% 8% 6% 5% 1% 0% 20% 40% 60% 80% 100% FY09 FY10 FY11 FY12 Q1FY13 Export PSU Bulk Retail Continue to focus on domestic market due to better price realization of petro products. Export products include Gasoline, VGO, Fuel Oil and Petcoke. Domestic sales in Q1FY13 higher than expected due to strong domestic demand and late monsoon.
Source :EOL Retail Marketing
First private sector company to set up Retail Outlets on Franchisee based Model ( DODO)* Retail Network Strength ~ 1600 ; Operational ROs ~ 1400; balance under various stages of construction. Deregulation of Gasoline enabled us to ramp up of retail sales volumes of Gasoline. EOLs strategy to rationalise its retail network & future expansion of network will be pursued in controlled manner until sustainable pricing scenario linked with International market prevails. CNG/ALPG# & other Non Fuel Revenue activities continue to bring additional revenue streams for franchisees. Total ALPG & CNG station increased to 21 and are achieving impressive growth.
33 3 74 16 26 40 3 4 195 43 27 70 37 11 5 159 4 103 35 60 103 1 70 3 215 11 26 2 * DODO - Dealer Owned Dealer Operated, CNG Compressed Natural Gas; APLG Auto Liquefied Petroleum Gas. Franchisee Business Model 34 Limiting EOLs capital commitment Land owned by franchisee Lease to EOL for 20-30 years Land leaseback and franchise agreements Investments for construction, installation, operation borne by franchisee
Protection against downside EOL pays 5% rental on land Franchisee earns 5% RoI for setting up outlet, linked to pre-agreed monthly sales target Volume-linked sales commission (monthly) High crude price 12.5% compensation to retain retailer Maximize margins when Oil price low Outlets opened when oil price low Potential upside from Indian fuel subsidy regime reform
Non fuel retail Revenue sharing agreements with channel partners. Revenue from sales of non-fuel products Franchisee Model Other Facilities at Vadinar Fire Fighting and Fire Protection 36 Mobile facilities 5 Foam Tenders, 2 Foam Nursers, 1 DCP tender. Round the clock trained fire fighting crew Auxiliary fire fighting squad Fire and gas detection system Clean agent fire fighting system in process control rooms Captive Power Plant & Utilities 37 POWER PLANT:
Three Boilers Two STGs 77 MW power
Two GTs with HRSG 220 MW
Expansion Two coal based boilers - 1500 TPH steam Three STGs 300 MW World Class Laboratory
38 Modern Maintenance Workshop
39 Effluent Treatment Plant
40 Modern Effluent Facilities help in Recycling all effluent back to process units thus making Essar a Zero Discharge Refinery
Supporting facilities at Refinery
41 Ports & Terminals (Owned by EPL) 1 SPM, Draft 32 m crude; intake capacity: 27 mmtpa 2 Jetties (1+1) for product offtake : 14 mmtpa Pipelines & other supporting infrastructure facilities completed Supporting facilities at Refinery
42 Tankages, Rail & Road Gantries (Owned by EPL) 136 tankages ( 106 + 30) for crude oils, products and Intermediates with capacity of ~ 2.94 Million KL (1.96 Mn KL earlier + 0.98 Mn KL expansion); Fully automated Loading Facilities; 3-White Oil truck Gantries, each 8-Bays; 2-LPG loading Gantries, each 8-Bays; 1-Black Oil loading Gantry of 10-Bays Fully automated loading Rail Gantry with 2 spurs (48 wagons @2400 mt ) - 5.5 mmtpa; Length of Gantry: 680 mtrs Products : LPG, Gasoline, SKO, ATF, Diesel, FO and Bitumen First Petcoke Deliveries 43 RBI recently approved Essar Oils proposal to raise $ 1.5 billion through external commercial borrowings (ECB) to refinance its rupee denominated debts with existing lenders. Refinance of Rupee debt with ECBs to provide an annual interest saving of Rs4.5 5bn crore, mainly due to reduction of interest rate by 4-5% Financial Engineering 44 CDR Exit CDR Exit Proposal of Company approved by CDR Core Group August, 2012 CDR Exit to provide operational flexibility for decision making. It also offer an opportunity to reduce cost of debt through restructure of debt Mix & participation of foreign banks. CDR expected to be completed in next 2-3 months. Sales Tax Sales Tax matter concluded with final judgement from Supreme Court to pay the balance sales tax liability in 8 quarterly instalment in 2 year from Jan, 2013. The Company is planning to pay the sales tax liability out of internal accruals generated from business operations and credit line of Rs50bn available with bank, if required. ECB Funding The Essar Advantage 45 Crude Sourcing Located at nearest point to major crude sources All-weather, deep-draft port, capable of handling VLCC. No dredging requirement 50% term contract & balance spot to take advantage of opportunity crude Approx. 90% heavy & ultra- heavy crude post Phase-I & Optimization Blending of crude Sourcing of domestic Mangala crude 15%-20% of basket Product Slate Highly Complex Refinery, capable to produce Euro IV/V Specification products post Expansion Elimination of negative crack FO, conversion into value added light and middle distillates 80% middle & light distillates Utilization of Coal & NG for refinery and power plant to further reduce the operating cost Market Dynamics Auto fuel (MS/HSD) demand in India to grow at 5%-10%
Anchor load to come from domestic market
Product pricing in India (Trade Parity Pricing) favoring sales in domestic Market.
Export of High Value products to developed markets.
One of the most Complex Refineries globally GRMs : Beating Benchmarks Annexure Refinery Safety Refinery Safety Rules 48 Safe Entry and Safe Exit Policy 49 ZERO ACCIDENTS Safety Rules & Regulations Induction & Training Meeting Audits Compliance Enforcement House Keeping Tool Box Talks Awards / Accreditations 50 Refinery has bagged the prestigious British Safety Council International Safety Award 2009 and 2010 second time in a row. Received Certificate of Merit for C.I.I. Award for Excellence in Management of Health / Safety / Environment for the year 2009 from ICI. Essar has bagged OISD Safety Award for the year 2009- 10 in the category Oil Refinery. Essar is the first private refiner to receive this award. Gujarat Safety Council state award for excellence in Safety for the year 2008 as well as for 2009. Essar Oil has been selected for a Special Commendation for the Golden Peacock Award for Occupational Health & Safety for the year 2010. Vadinar Terminal has achieved 5 Star in the Environmental Audit conducted by the British Safety Council in 2009 & 2010; only Terminal to achieve a Double 5 Star In Health & Safety and Environment.
Essar Oil Ltd won National Safety Council USA, 2010 Industry leader award for achieving best safety performance within its industry
Sustainability @ Essar Oil 51 Healthcare
Education
Environment
Sustainable livelihood Corporate Social Responsibility Financial support for local teachers and students. Building, repair and maintenance of schools and educational facilities. Donation of computers, notebooks and stationary. Support for and implementation of educational schemes and projects of local governments. Classes for computer education, language, and adult literacy.
24 hour Community Health Center at Jankhar village, near the Vadinar refinery. Mobile medical clinics reach out to villages at our operational sites in Vadinar and Raniganj. Mother & Child welfare clinics and OPD centres at various locations. Health check up camps, including eye-care, cancer, vaccination and general health check-ups for school children
State-of-the-art air pollution control equipment at all sites. Anti-plastic campaigns at schools. Conservation of water and other natural resources. Maintaining flora and fauna. Afforestation and biodiversity conservation.
Construction of a water tank Providing computers and sewing machine to a local jail Periodically vaccination programs. Provides fodder and water assistance to surrounding villages during summer. Periodically vaccination programs.
Corporate Social Responsibility 52 Occupation Health Centres at Site, City and Township Corporate Social Responsibility 53 Learning Centre Health, Safety and Environment 54 MANGROVES PLANTATION CORALS & MARINE LIFE GREEN BELT 700 ACRES Green Belt and Marine Life Protection
India Trends 2030 55 Indias GDP is expected to grow in the 7-8% range in the next five years 590 million people will live in cities, nearly twice the population of United States today 91 million urban households will be middle class, up from 22 million today 700-900 million square meters of commercial space and residential space needs to be built or a new Chicago every year 2.5 billion square meters of roads will have to be paved, 20 times the capacity added in the past decade 7400 kilometers of metro and subways will need to be constructed 20 times the capacity added in the past decade Source : Various industry reports Expansion Process Flow Diagram 56 VGO HT DHDT DCU ISOM