Essar Oil
In June, Essar upgraded its refinery to process 405,000 barrels of oil a day, or about 9 percent of India's refining capacity, and raised complexity to handle cheaper heavy grades.
It processed 89 percent of heavy and ultra-heavy crude in April-June period, higher than 66 percent in the same period a year ago, managing director L.K. Gupta told reporters on a conference call on earnings for the first quarter of this financial year.
Essar processed about 75 percent of heavy and ultra heavy crude oil in January-March, the last quarter of 2011-12.
Essar aims to buy 15-20 percent of its crude oil needs from the domestic market, 35-40 percent from Latin American sources, and 30-40 percent from the Middle East, it said in May.
The company in 2010 began replacing Latin American crudes with locally produced Mangala oil but has now turned back to the region to feed its expanding capacity. In April-June, it shipped in oil from Venezuela, Mexico, Colombia, and Brazil.
Essar is also cutting dependence on oil from Iran, its single largest supplier, in line with plans by other Indian firms as western sanctions limit the flow of Iran's exports.
The United States and its allies aim to reduce Iran's oil revenues to pressure Tehran not to build nuclear weapons. Gupta did not comment on imports from Iran.
Essar on Tuesday posted a net loss of 14 billion rupees for its fiscal first quarter ended June, hit by interest and depreciation costs, falling rupee and declining oil prices.
It aims to boost margins to $7-$8 a barrel over benchmark Singapore margins from the July-September quarter as its refinery is now operating at full capacity, Gupta said.
In April-June its refining margins was $5.12 a barrel versus $2.5 in the same period a year ago.
Essar may use Reserve Bank of India rules to raise $1.5 billion foreign debt to retire costlier rupee loans and cut interest burden, Suresh Jain, the company's head of finance said.
Essar had total debt of 147 billion rupees as of June 30.
The private refiner, which owns 1,400 fuel pumps in India, has no plans for retail expansion unless the government ends control over the pricing of diesel or compensate private refiners for the sale of fuel at cheaper rates, Gupta said.
India compensates only state-refiners for selling gasoil at government-fixed cheaper rates. A litre of gasoil costs 42 percent less than gasoline in India.
Essar is selling 18,000-20,000 kilolitres of gasoline every month through its fuel stations, Gupta said, adding his firm would produce 8-9 million tonnes of gasoil in this fiscal year with most of that being sold to state-refiners for local sales.
