Essar to open 1500 petrol pumps after its Vadinar refinery opens

New Delhi, July 26 (UNI) Essar Oil Ltd (EOL) will open 1500 petrol pumps, many of them in rural areas, soon after the commissioning of the 12 million tonne a year output Vadinar Refinery in Gujarat this October.

The company has become bullish on opening retail outlets mainly because of their refinery venture, to be second largest after Reliance's Jamnagar refinery. Recently, Essar reopened about 350 petrol pumps out of its 517 petrol stations.

The refinery at Jamnagar will immediately produce seven million tonnes of crude and would reach the 10 to 12 million mark in a couple of months time, industry sources told UNI.

The Ruia-owned company was earlier selling petrol at a loss owing to high crude prices in the world markets. ''There was a huge price differential between the procurement rate and selling which the company absorbed,'' the source said.

Talking about Essar's broad strategy on retail he said, ''Our focus on the petrol pumps location is not to focus on areas where many players still exist, like the mega cities but in the rural and semi urban areas.'' Essar Oil, the petroleum retail company of the group, is setting up a 10.5-million-tonne refinery in Jamnagar.

The refinery project has been delayed several times due to environmental concerns and due to shortfall in equity contributions.

The refinery was 60 per cent complete in 1998 but was struck by a cyclone that caused considerable damage. The refinery expects to employ over 1,000 and the construction process will require between 3,000 and 4,000 personnels.

Essar Oil will focus on producing middle distillates such as high grade kerosene oil and low sulphur high speed diesel, which form over 60 per cent of India's domestic consumer demand.

By substituting imports, this will help conserve India's foreign exchange. It will also produce LPG and lead-free gasoline of various octane levels for the domestic markets and high-octane lead-free gasoline for export.

When completed, the refinery will be able to produce 5.5 mmtpa of diesel and 2.2 mmtpa of gasoline. During the next four years, Essar Oil are to open over 17,000 retail outlets for their fuels and oil products across India.

The refinery will refine crude oil to produce diesel, gasoline, jet fuel, kerosene, fuel oil and bitumen to suit market requirements.

Imported crude oil will be discharged from a single buoy mooring situated off a coastal site at a distance of 8 km. A submarine on-shore pipeline will transfer crude to onshore storage tanks.

The company had suffered Rs 2.50 per litre loss on petrol and Rs 4.50 a litre on diesel. Essar's plea along with Reliance was turned down by the government for giving them compensation for their losses owing to hike in world oil prices.

UNI/RT PV DB1234