Essar Oil today said it has renewed an agreement to sell 2 million tonne a year of petroleum products like diesel and petrol to Indian Oil Corp (IOC) for three years to 2015.
Essar Oil Ltd (EOL), a subsidiary of the London-listed Essar Energy and IOC have renewed the major product sale and purchase agreement, the Mumbai-based firm said in a statement here.
"The renewed three-year agreement, running from 2012 to 2015 requires EOL to supply diesel, petrol, kerosene and ATF (aviation turbine fuel) to IOC from its Vadinar Refinery, totalling 2 million tonne every year," it said.
The agreement also entitles EOL to purchase products from IOC and gives the two companies the option of sharing each other's distribution infrastructure.
EOL has similar product sale and purchase agreements with two other state-owned oil marketing companies, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.
The company, however, did not give details of its agreement with BPCL and HPCL.
"The contract with IOC will be Essar Oil's largest fuel supply contract," the statement said.
Essar is currently completing the phase 1 expansion project at its Vadinar refinery which will increase capacity from 14.7 million tonne a year to 18 million tonne by March 2012. A concurrent optimisation project will increase capacity further to 20 million tonne by September 2012.
EOL CEO (Marketing) S Thangapandian said: "Once the ongoing expansion project is completed, our Vadinar refinery will be able to serve our PSU customers better, especially in terms of meeting the growth in domestic demand for Euro IV grade fuels."
IOC General Manager (Supplies) Karandikar said: "Given the rapid growth in petro product demand in India and the additional capacity that will soon come on stream at Essar's Vadinar refinery, we look forward to increasing the offtake volumes."
