Essar Oil is all set to commission its USD 2.2-billion 10.5-million-tonne (mt) refinery at Vadinar in Gujarat this month. Initially, the company plans to commission 7.5 mt of its capacity and by March-April 2007, the refinery is expected to go full stream.

"We are in the final stages of getting the refinery ready to cut crude. It should be ready in seven to 15 days," said Mr S. Thangapandian, Marketing Head.

The first cargo of one million barrels Saharan blend crude from Algeria was received at Vadinar port in September. On the sourcing of the crude, the official said: "Majority will be on spot basis. However, there are some long-term contracts too."

Elaborating on the products, the official said that the company plans to focus on producing middle distillates such as superior kerosene oil and high-speed diesel.

It would also produce LPG and lead-free petrol of various octane levels for the domestic market, and high-octane lead-free petrol for exports.

The refinery can process diverse varieties and qualities of oil such as light, heavy, sour or sweet crude, he added.

Besides, the refinery is integrated with a captive 120 MW power plant, port and terminal facilities.

The company had resumed work on the refinery in March 2005 after work on the project was stopped in January 2002.

The refinery was originally scheduled to begin commercial operations in April 2007, the official said, adding that now it was being commissioned ahead of schedule.

Currently, the country's refining capacity stands at 138 million metric tonne per annum (MMTPA). By the beginning of the 11th Five-Year Plan the refining capacity is expected to touch 148.97 MMTPA, of which public sector refineries would account for 105.47 MMTPA, or 70%.

According to the Essar official, once the refinery goes on stream the company proposes to export almost a third of the quantity produced in the refinery while the rest will be used for the domestic market.

Currently, the company is sourcing petroleum products for its retail outlets from MRPL and Numaligarh Refinery Ltd.

Currently, Essar operates 900 retail outlets; 500 are under construction or ready to go on stream.

The retail outlets are mainly spread across the Western and Northern parts.

By early 2007 the company plans to have 2,500 retail outlets on franchisee basis spread across the country, except in Jammu and Kashmir and Himachal Pradesh. Of these, the company plans to have 625 in rural areas.