Essar Oil renews product sale and purchase agreement with BPCL

Essar Oil Limited has renewed a major product sale and purchase agreement with state-run oil marketing company Bharat Petroleum Corporation Limited (BPCL).

Under the agreement, running up to 2016, Essar will supply diesel, petrol, kerosene and ATF (aviation turbine fuel) to BPCL from its Vadinar refinery. The agreement also entitles Essar Oil to purchase products from BPCL while giving both the companies the option of sharing each other's distribution infrastructure.

''We are delighted to further cement our long-term relationship with BPCL. Essar Oil has emerged as the biggest supplier for fuels for BPCL. With our expanded capacity coming on stream, we are fully geared to serve the growing demands of high quality fuel for the nation,'' S Thangapandian, CEO – Marketing, of Essar Oil Ltd, said.

Essar oil also has similar product sale and purchase agreements with the other two public sector oil marketing companies - Indian Oil Corporation Limited and Hindustan Petroleum Corporation.

Essar has recently completed the phase 1 expansion project at its Vadinar refinery at a capex of Rs8,300 crore, which has increased its capacity from 14.7 million tonnes a year to 18 million tonnes, and improved complexity to 11.8 under the Nelson complexity index.  The Nelson complexity index is a measure of the secondary conversion capacity of a petroleum refinery relative to its primary distillation capacity. A further optimisation project, currently underway, will increase capacity further to 20 million tonnes by September 2012.

Vadinar Refinery, amongst the most complex refineries globally, has the flexibility to produce higher value, high-quality products, including Gasoline (petrol) and Gasoil (diesel) conforming to Euro IV and V norms, that have growing acceptance in both domestic and international markets.

Essar Oil has a strong presence across the hydrocarbon value chain from exploration and production to refining and oil retail. It has a global portfolio of onshore and offshore oil and gas blocks, with about 2.1 billion barrels of oil equivalent in reserves and resources.

Essar Oil has over 375,000 bpsd (barrels per stream-day) of crude refining capacity that is being expanded to 405,000 bpsd. The company also has more than 1,600 Essar-branded oil retail outlets across the country.