The Board of Directors of Essar Oil Limited announced in its meeting today that it has approved plans to increase the capacity of the refinery at Vadinar from 10.5 million tonnes (220,000 bbls per day) to 34 million tonnes per annum (700,000 bbls per day). The expansion is being carried out at a cost of approximately US$ 6 billion (Rs.24,000 crore).

In order to meet part of the requirement of funds for the expansion project and other corporate purposes, including refinancing existing debt of the Company, the Board of Directors has approved the issue of GDS to the Promoters/ Promoter Group on a Preferential basis, up to a maximum of US$ 2 billion, at an effective price of Rs.200 per share for the underlying equity shares, subject to receipt of Shareholders’ and Regulatory approvals as may be required.

The current installed capacity of the refinery is 10.5 million tonnes per annum (220,000 bbls per day) made at an investment of approximately US$ 3 billion (Rs.12, 000 crore). The refinery was commissioned in November 2006 and has been operating at approximately 7.5 million tonnes. The Fluid Catalytic Conversion Unit (FCCU) and Diesel Hydro De-sulphuriser Unit (DHDS), which will be fully operational shortly, will enable the refinery to reach its full capacity i.e., 10.5 million tonnes. These units will enable the Company to process heavier crudes and meet the stricter international emission norms.

The company will be expanding its capacity progressively to 34 million tonnes per annum by 2010. The first stage of expansion will involve de-bottlenecking and the addition of more sophisticated bottom upgrading units such as delayed coker The second phase of expansion will see a new set of distillation units, including addition of all secondary units and another coker.

Basic engineering design for the expansion has been completed. The equipment will incorporate the latest in technology from well renowned international suppliers. With the expansion, the refinery will be able to handle a wide range of crudes from light to heavy and take advantage of the market differential between heavy and light crudes.

The Nelson Complexity Index of the refinery after the expansion to 34 million tonnes per annum will be approximately 12.8. (Nelson Complexity Index measures the ability of the refinery to upgrade the crude to best quality and maximum quantity of value added refined products).

On completion of the expansion, the refinery will produce petroleum products of very high quality meeting the most stringent environmental norms i.e. Euro IV and Euro V internationally.

The refinery is supported by dedicated infrastructure that includes utilities, terminals, crude intake and product evacuation facilities.

The promoters have informed the Company that they no longer intend to proceed with the delisting of the equity shares of the Company from the Stock Exchanges.

About Essar Oil
Essar Oil Limited is a part of Essar Energy Holdings Limited, which intern is a subsidiary of Essar Global Limited. Essar Energy Holdings Ltd is a fully integrated oil company of international size and scale. Its assets include developmental rights in proven exploration blocks in India and abroad. Essar Oil also has a marketing network of over 1,250 oil retail stations across India with plans to increase the network to 2500 retail stations.

About Essar Global and the Essar Group:
Essar Global Limited, the holding company of the Essar Group, is a diversified group straddling the manufacturing and service sectors of Steel, Energy, Power, Communications and Telecom, Shipping & Logistics, and Construction. With a firm foothold in India, Essar Global is focused on global expansion with projects and investments in Canada, USA, Africa, the Middle East, the Caribbean and South East Asia.

For further information, please contact:

Essar Group