1.

ESSAR GROUP: PROFILE

1.1. Introduction
THE ESSAR GROUP IS A GLOBAL CONGLOMERATE AND A LEADING PLAYER IN THE SECTORS OF STEEL,
ENERGY (OIL & GAS AND POWER), INFRASTRUCTURE (PORTS, PROJECTS & CONCESSIONS) AND
SERVICES (SHIPPING, TELECOM, REALTY AND BUSINESS PROCESS OUTSOURCING). WITH OPERATIONS IN
MORE THAN 25 COUNTRIES ACROSS FIVE CONTINENTS, THE GROUP EMPLOYS 75,000 PEOPLE AND HAS
REVENUES OF OVER US $ 27 BILLION.
The Essar Group is one of India's largest corporate houses with interests spanning the
manufacturing and service sectors in both old and new economies: steel, power, shipping,
constructions, oil & gas and telecom. The Group has an asset base of US$ 4.4 bn (Rs.200 billion) and
a turnover of over US$ 2.08 bn (Rs.95 billion). It employs 20000 people in 50 locations worldwide.
Strategic investments made by the group over the past decade have resulted in the creation of
tangible and intangible assets that are at the heart of the Indian Economy.
The Group takes pride in being a high-performance multinational organization, providing worldclass services and products. Manned by a highly efficient and dynamic team of employees, the Group
is growing stronger every day. A committed corporate citizen, the group provides unwavering
support to the community as well as initiates various social and ecological drives that have a
positive impact on society.
All the groups investments have been consolidate under Essar Global Ltd. With its six
sectors holding companies:

ESSAR Steel Holdings Ltd.

ESSAR Power Holdings Ltd.
ESSAR Energy Holdings Ltd.
ESSAR Communication Holdings Ltd.
ESSAR Shipping & Logistics Ltd.
ESSAR Construction FZE.
Essar brand names include:
Vodafone Essar

Algoma Steel

ESSAR Group is headed by Chairman Shashi Ruia & Vice Chairman Ravi Ruia.

1.2 Mission
To create enduring value for customers and stakeholders in core manufacturing and
service businesses, through world class operating standards, state of the art technology
and the Positive attitude of our people.

1.3 Major Achievements of Essar Group

Built the world's largest gas-based sponge iron plant

Pioneered the laying of offshore oil and gas pipelines in India
Built India's first and longest is land break water.
Set up Indias first new generation independent power plant with a 515 MW

combined cycle capacity at Hazira.

2. ESSAR REFINERY: OVERVIEW

2.1 Story of Essar Refinery

The Essar Oil Ltd Refinery in Gujarat, India (started in 1996) was completed and
commissioned in 2006 (commissioned in third quarter). The refinery project was
delayed several times due to environmental concerns and financial problems, including
initial cost overruns and a shortfall in equity contributions.

According to company reports, the refinery was 60% complete in 1998 but had the
misfortune to be struck by a cyclone that caused considerable damage. The refinery
currently has the capacity to produce 4,00,000 barrels a day (20 million metric tons
per annum) and plans are underway to increase the capacity to 680,000 barrels a day
(34 mmtpa) by the end of fiscal 2018. The refinery employs over 1,000 personnel (the
construction process required between 3,000 and 4,000).

The refinery is now the second largest in India after the Reliance Jamnagar refinery on
an adjacent site which can produce over 64 mmtpa.

Essar Oil focuses on producing middle distillates such as high-grade Kerosene oil and
low sulfur high-speed Diesel, which form over 60% of India's domestic consumer
demand. Substituting imports will help conserve India's foreign exchange. The refinery
also produces LPG and lead-free Gasoline of various octane levels for the domestic
markets and high-octane lead-free Gasoline for export. Essar Oil has 1,300 retail
stations with plans to add another 150 outlets by the end of 2010.

OIL & GAS

CURRENT OPERATIONS
Exploration & Production
Asia, Africa & Australia: Diverse portfolio of offshore and onshore Oil & Gas blocks as well as
Coal Bed Methane blocks

Refining:
Vadinar, Gujarat, India: World-class
20-million tonnes or 405,000 bpsd refinery producing fuels compliant with latest emission
standards. Dedicated infrastructure includes a captive power plant, dispatch facilities by rail, road,
sea and pipeline, associated tankages, pipelines, water intake facilities, and a Single Buoy Mooring
system, which can accommodate Very Large Crude Carriers, to receive crude
Stanlow, UK: 296,000 bpsd refinery with 15 percent market share in the UK market
Mombassa, Kenya: Fifty percent controlling stake in an 80,000 bpsd refinery run by the Kenya
Petroleum Refineries Ltd (KPRL); the remaining 50 percent is owned by the Kenyan government

Retailing:
Across India:

Marketing network of over 1,600 retail outlets

Tie-ups with other oil marketing companies that gives Essar Oil access to product and right
to use their terminals and facilities for placing and marketing our products.

UNDER EXECUTION
Stanlow, UK, & Mombasa, Kenya

Working on a modernisation plan for Stanlow and Mombasa refineries to increase

throughput as well as operational efficiency.

A FULLY INTEGRATED OIL & GAS COMPANY OF INTERNATIONAL SCALE WITH
STRONG PRESENCE ACROSS THE HYDROCARBON VALUE CHAIN FROM EXPLORATION & PRODUCTION
TO OIL RETAIL
ACCESS TO A GLOBAL PORTFOLIO OF ONSHORE AND OFFSHORE OIL & GAS BLOCKS, WITH

ABOUT 45,000 SQ KM AVAILABLE FOR EXPLORATION

LARGEST COAL BED METHANE (CBM) PLAYER IN INDIA
OVER 405,000 BPSD (BARRELS PER STREAM DAY) OF CRUDE REFINING CAPACITY AT
VADINAR IN GUJARAT, INDIA
OVER 296,000 BPSD OF CRUDE REFINING CAPACITY AT STANLOW, UK
FIFTY PERCENT CONTROLLING STAKE IN KENYA PETROLEUM REFINERIES LTD, WHICH
OPERATES A REFINERY IN MOMBASA, KENYA, WITH A CAPACITY OF 80,000 BPSD
OVER 1,600 ESSAR-BRANDED OIL RETAIL OUTLETS IN VARIOUS PARTS OF INDIA

ESSAR REFINERY: OVERVIEW

2.1 Story of Essar Refinery
The Essar Oil Ltd Refinery in Gujarat, India (started in 1996) was completed and commissioned in 2006
(commissioned in third quarter). The refinery project was delayed several times due to environmental
concerns and financial problems, including initial cost overruns and a shortfall in equity contributions.
According to company reports, the refinery was 60% complete in 1998 but had the misfortune to be
struck by a cyclone that caused considerable damage. The refinery currently has the capacity to produce
4,00,000 barrels a day (20 million metric tons per annum) and plans are underway to increase the
capacity to 680,000 barrels a day (34 mmtpa) by the end of fiscal 2018. The refinery employs over 1,000
personnel (the construction process required between 3,000 and 4,000).
The refinery is now the second largest in India after the Reliance Jamnagar refinery on an adjacent site
which can produce over 64 mmtpa.
Essar Oil focuses on producing middle distillates such as high-grade Kerosene oil and
low sulfur high-speed Diesel, which form over 60% of India's domestic consumer
demand. Substituting imports will help conserve India's foreign exchange. The refinery
also produces LPG and lead-free Gasoline of various octane levels for the domestic
markets and high-octane lead-free Gasoline for export. Essar Oil has 1,300 retail
stations with plans to add another 150 outlets by the end of 2010.

2.2 Refinery Start-up

In November 2006, Essar Oil started operations in its Vadinar grass roots refinery and trial production
with a capacity of 7.5 mmtpa. In December 2006, the plant dispatched its first cargo of 35,000 tonne
vacuum gas oil.
Essar shut down the plant for three weeks in July 2007 to upgrade the capacity to 210,000 bpd as well as
to add secondary units. After the start of the commercial production of 10.5 mmtpa in May 2008, Essar
Oil reported a gross sale of Rs100bn for the first two months of its commercial operations. The profit for
the quarter ending 30
June 2008 was INR 4.34bn. Essar posted a gross turnover of INR 418bn between May
2008 and March 2009. Since then, it has reportedly increased by 19.7% in the first quarter of 2010.

2.3 Commissioning Process

The units commissioned in the first phase were the CDU, VDU, Sulfur Recovery Unit, Naphtha
Hydrotreater Unit, Catalytic Cracker Unit and Visbreaker Unit. The Fluid Catalytic Cracker Unit and a
Diesel Hydro Desulfurization Unit were commissioned in November 2006. The FCC and DHDS plants were
modified so as to be compliant with the cleaner Euro III and Euro IV fuels. The refinery configuration
lends itself well to debottlenecking and its capacity is enhanced to 20 mmtpa. The refinery is fully
integrated with its own dedicated 77 MW power plant, which it plans to expand to 1,200 MW plant.
The docking facilities include an SBM capable of handling vessels up to 350,000 DWT with a capacity of
25 mtpa, tankages with interconnecting pipelines of 20 mtpa capacity, marine product dispatch capacity
of 12 mtpa and rail-car and truck-loading facilities.

2.4 Crude supply

Ahead of the commissioning, the company received one million barrels at the Vadinar port in Gujarat in
August 2006. The crude was a Saharan blend suitable for refining in the Essar Oil's refinery. The company
also received a second cargo from Vitol in West Asia. Both cargos were of sweet crude. The annual
requirement of crude oil at the refinery is in the region of 20 mmtpa. The refinery is configured to allow
flexibility to process diverse varieties and qualities of crude.
The refinery is primarily designed to handle a crude mix of Arabian Light and Heavy in a 70:30 ratio.
However, adequate flexibility has been provided to handle a variety of crude mixes at refinery processing
units from sweet-light crude to heavy high sulfur sour and bituminous crude.
The refinery refines crude oil to produce diesel, gasoline, jet fuel, kerosene, fuel oil and bitumen to suit
market requirements. Imported crude oil is discharged from a single buoy mooring situated off a coastal
site at a distance of 8 km. A submarine / onshore pipeline transfers crude to onshore storage tanks.

2.5 Contractors and Construction

The principal contractor and project manager for the project since it was started is ABB Lummus Global
of the Netherlands (ABB put Rs 9300 into the project). The company responsible for detailed
engineering, procurement and construction (EPC) is TCE.
Larsen and Toubro is another engineering company involved in the project. Semb Co E&C has secured
contracts worth $350 m for engineering, procurement, project management and construction
management for the project.
The TCE remit for construction includes offsite facilities, storage and transfer of crude, intermediates and
products, blending facilities, dispatch facilities, fuel oil / gas system, effluent treatment and disposal
facilities. Utilities include power / steam generation facilities (two 38.5 MW / three 150 t per hour) with
distribution network, compressed air (three 3,120 Nm per hour) and nitrogen system (1,900 Nm per
hour), demineralizing plant (775 m per hour), desalination plant (two 390m per hour), salt cooling
water facilities (64,000 m per hour) and tempered water facilities. A refinery-wide integrated
Distributed Control System (DCS), safe guarding system, fire and gas detection system and electrical
control system is provided with hardware

located in satellite buildings and operator consoles provided in the crude oil tank control building and
central control building. A sophisticated Tank Gauging System (TGS) has been provided one each for
crude oil tank farm, product and intermediate tank farm and dispatch tankages comprising radar, servo
and hydrostatic systems. Over 700 motor-operated valves with intelligent actuators are connected to
DCS and emergency shutdown systems. The dispatch automation system is integrated with the TGS and
DCS systems.
The refinery is being constructed with a view to the future since it will have sufficient infrastructure for a
low-cost expansion to a production capacity of 27 mmtpa. The refinery also has two desalination plants
each with a capacity to produce 8,450 m a day of less-than-5 ppm total dissolved solids (TDS) from feed
water of 40,000 ppm TDS (sea water).

2.6 Port and shipping

The refinery has its own port and terminal facilities. Vadinar port is an all-weather, deep-draft, natural
port with loading facilities for railcars and trucks. Vessels up to 350,000 DWT can be handled through
single point mooring (SPM) and there is also a marine product dispatch with a capacity of 14 mtpa.
Essar Shipping has an agreement with Essar Oil to ship crude oil as required by the refinery. Essar Oil has
set up a new company, Vadinar Oil Terminal, to administer all affairs of the new deep-water port on
behalf of Essar Oil and Essar Shipping.

2.7 Pipelines
The refinery is ideally located on the west coast of India at Vadinar, Gujarat, close to both suppliers and
customers. This is the nearest point to the Middle East, which is a major source of crude supply. The site
is linked to the Kandla-Bhatinda product pipeline through the Vadinar-Kandla pipeline, giving it easy
access to the key markets of North India.
Essar constructions have bagged several pipeline projects over the past few years. The projects include
the INR 2 bn Baroda Ahmadabad Kalol gas pipeline project, Rs. 740m product pipeline project in
Tamil Nadu, Rs 1.3 bn gas pipeline project from GAIL and most recently Rs 1.9 bn, 504 km pipeline
project. Essar Oil also has a stake in the pipe-holding company Petronet India.

2.8 Financing
Funding for the project, which amounts to an estimated INR 98,740 cr ($2.26bn), has been a complicated
arrangement. Financial closure by Essar Oil has now been achieved for the project. In January 2005,
Essar Projects raised Rs. 3750 crores through Global
Depository Receipts (GDR) and Essar Shipping raised $213m through the issuing of Foreign Currency
Convertible Bonds (FCCB), to make a total of $299m (this was a condition of the remaining funds being
released). The financial institutions, including ICICI bank, the Industrial Development Bank of India (IDBI)
and the Industrial Finance Corporation of India (IFCI) bank, then released the remainder of the Rs 80000
crores funding held in escrow for the project.
In October 2008, Essar Oil ordered four steam turbine generators from Siemens Energy for the Vadinar
Oil refinery in Gujarat. The $50m deal includes two steam turbines each rated at 105MW, two 93 MW
steam turbines and four generators. Delivery of the steam turbine generators was scheduled by the third
quarter of 2010.

2.9 Expansion
Essar Oil Refinery will be expanded in two phases to achieve a capacity of 36 mmtpa.
The first phase comprises capacity expansion to 20 mmtpa. An investment of Rs78 bn is being made in
the first phase, which was commissioned by March 2012. By the end of the first half of 2009, 33% of
phase I had been completed.
In phase II, there are plans for establishing a new processing unit with a capacity of 18mmtpa. An
investment of $4bn is being made in the phase II expansion, which is expected to be completed by
March 2018. Essar's construction arm, Essar Construction (I), is undertaking the expansion of the
refinery. As of January 2010, 28% of the construction was completed and overall refinery expansion of
41% was achieved. On completion, Essar oil will produce products in compliance with
Internationalenvironmental norms Euro IV and V.

3. ESSAR REFINERY: PROCESSES

3.1 Segments
The refinery at Essar Oil Limited, Vadinar is comprised of the following segments:

OSBL: Outside of Battery Limits

Utilities
Off sites
ETP
Interconnecting Lines
Other facilities

COT: Crude Oil Tankage

It fulfills the storage requirements for crude oil.

ISBL: Inside of Battery Limits

CDU: Crude Distillation Unit

VDU: Vacuum Distillation Unit
FCCU: Fluid Catalytic Cracking Unit
UGS: Gas Concentration Unit
VBU: Vis Breaker Unit
NHT: Naphtha Hydro Treating Unit
CCR: Continuous Catalytic Reformer
DHDS: Diesel Hydro Desulfurization
SRU: Sulfur Recovery Unit
HMU: Hydrogen Manufacturing Unit
PIT: Process Intermediate Tank
DHDT: Diesel Hydro Treating Unit
ISOM: Isomerization Unit
VGOHT: Vacuum Gas Oil Hydro Treating Unit
DCU: Delayed Coker Unit

3.2 Primary Processes

Crude Distillation

Primary unit to separate different boiling point fractions such as LPG, Naphtha,
Kerosene, HSD, RCO etc.
Distillation conducted at slightly higher than atmospheric pressure.

Unit design for specific crude with flexibility to process a few other crudes.

Vacuum Distillation:

Sub atmospheric distillation of atmospheric column bottoms for production of fuels

or lube stocks.
Fuels Production: Metal contents, CCR, Final boiling point etc. critical.
Lubes Production: More stringent fractionation requirements

3.3 Secondary Processes

Further conversion of Vacuum Gas oils and Residue required maximizing production ofmore useful
products. Such processes are called secondary or bottoms upgradation processes.

Catalytic Hydro Processing (Hydrocracking)

Catalytic cracking of vacuum gas oils in presence of Hydrogen

High pressure and temperature
Can produce Fuels / Lubes
No further treatment required for fuel products

Fluid Catalytic Cracking (FCC)

Catalytic cracking of vacuum gas oils or residues at high Temperature
Fluidized catalytic bed with continuous regeneration of catalyst
Cracked products contain unsaturated and hence need further treatment

Visbreaking (Thermal Cracking)

Thermal cracking of vacuum residue at high temperature
Provide residence time in coil (coil type) or outside in separate vessel (soaker type)
Gas oil & Naphtha are products

Delayed Coking

Coking occurs in the Reactor Drum

Coke removed by water jetting
Coke Drum operation in batches
Naphtha , gas oils are other products

Solvent De-asphalting

Extraction of useful oil from Vacuum residue

Propane Butane mixture used as solvent
Useful oil can be cracked in FCC or Hydrocracker or can be converted into Bright
Stock (lubes)
Asphalt byproducts can be removed into Bitumen

Partial Oxidation

Partial oxidation of vacuum residue or asphalt

Produces Synthesis Gas or Hydrogen
Synthesis gas can be converted into power
Hydrogen consumed in refinery

3.4 Miscellaneous Processes

Catalytic Reforming Unit

Increases octane number of gasoline

Produces hydrogen
Semi regenerative (regeneration during shut downs) or
Continuous type

Treating Units
Merichem/Merox
1. Removes H2S, Mercaptans from LPG, Gasoline, and Kerosene/ATF.
Desulfurization
1. Catalytic Desulphurization of Naphtha, Diesel
2. Also improves Cetane number of Diesel
3. Diesel Hydro Desulfurization Unit produces Diesel as per Indian usage.
4. Diesel Hydro Treating Unit produces Diesel as per Euro IV and Euro V norms.

Lube processing Units

Aromatic Extraction
1. De-waxing
2. Hydro treating
3. Catalytic Processes

Processes to Meet Environment Regulation

Sulfur Recovery
Water Treatment
Flue Gas Desulphurization

3.5 Auxiliary Operation and Facilities

Steam and Power Generation

Flares and relief system

Process and fire water system
Furnaces and heater , pumps and valves
Supply of steam, air, nitrogen and other plant gases
Alarms and sensors ; noise and pollution control
Sampling, testing and inspecting ; laboratory, control room, maintenance and

administrative facilities