essar oil limited · 3 current price grm $ 6.49/bbl as against $ 4.24 5 4 ramped up processing of...

Essar Oil Limited

Analyst Presentation19th October, 2010

� Highlights for Q2 FY 2010

� Refinery Operation : Mr. P. Sampath

� Refinery Expansion : Mr. Naren Vachharajani

Agenda of Presentation

� Refinery Expansion : Mr. Naren Vachharajani

� CBM Project : Mr. Shailendra Singh

� Financial Performance : Mr. P. Sampath

� Annexure : Expansion Photographs

2010-11 : Mr. Naresh Nayyar

: Mr. P. Sampath

: Mr. Naren Vachharajani

Agenda of Presentation

: Mr. Naren Vachharajani

: Mr. Shailendra Singh

: Mr. P. Sampath

: Expansion Photographs

Highlight : Q2 FY 20102010-11

2

Highlights ( Q2 FY 2010 - 11)

Gross Revenue of Rs. 12415 crore; Domestic & Export Ratio : 69% & 31%2

1 Optimization of Capacity with highest ever through put achieved : 3.69 MMT

3 Current Price GRM $ 6.49/bbl as against $ 4. 24

5

Ramped up processing of Mangla Crude to 30,000 b pd, constitute 9% of crude slate4

Refinery Expansion Project on schedule ; Overall p rogress : 68.4 %6

7

Consumption of Gas commenced at Refinery through GS PC pipeline

8 Raniganj CBM : Commercial Sales to commence durin g quarter ended Dec, 2010

Retail Sales increased to Rs. 752 crore against Rs 536 crore for quarter ended June

increase in sale of Motor Spirit.

11)

Domestic & Export Ratio : 69% & 31%

Optimization of Capacity with highest ever through put achieved : 3.69 MMT

24/bbl for corresponding quarter ended Sept - 09

Ramped up processing of Mangla Crude to 30,000 b pd, constitute 9% of crude slate

Refinery Expansion Project on schedule ; Overall p rogress : 68.4 %

Consumption of Gas commenced at Refinery through GS PC pipeline

Raniganj CBM : Commercial Sales to commence durin g quarter ended Dec, 2010

Retail Sales increased to Rs. 752 crore against Rs 536 crore for quarter ended June - 2010 on account of

3

3

Refining Operation

4

Optimisation of Capacity

6.39

13.50

6

8

10

12

14

Highest ever throughput achieved 3.69 MMT, consi stently operating above 14 mmtpa annualised capacity

-

2

4

6

H1FY10 FY10

Qty : MMT

7.37

Highest ever throughput achieved 3.69 MMT, consi stently operating above 14

5

3.69

H1FY11 Q2FY11

Optimization of Crude Mix

Crude Slate

53% 51%

18% 22%

50%

60%

70%

80%

90%

100%

Ultra Heavy

� Processed more than 20 types of crudes including ul tra heavy & tough crudes

like Ras Gharib, Merey, Maya, Nowrooz

� Avg. API (Density) – 32.6 , Avg. Sulphur %

� Mangla crude constitute 9% of crude basket

29% 27%

0%

10%

20%

30%

40%

Q2FY10 FY10

Crude Slate

47% 43%

19% 21%

Heavy Light

Processed more than 20 types of crudes including ul tra heavy & tough crudes

32.6 , Avg. Sulphur % – 1.50 and Avg. TAN – 0.30

Mangla crude constitute 9% of crude basket

6

34% 36%

Q1FY11 Q2FY11

Optimization of Product Mix

Product Slate

23% 24%

80%

100%

Light Middle

25% 27%

51% 49%

0%

20%

40%

60%

H1FY10 FY 2010

Production of high margin middle & light distillates

Optimization of Product Mix

Product Slate

27% 26%

Heavy

7

26% 27%

46% 47%

H1FY11 Q2FY11

of high margin middle & light distillates

Sales Performance

Sales Mix

8%8%

9%8%

50%

60%

70%

80%

90%

100%

Retail Bulk

� Focus in domestic market for optimization of refine ry margin

19%25%

64% 60%

0%

10%

20%

30%

40%

50%

H1FY10 FY2010

Sales Mix

6% 4%

6%7%

PSUs Exports

Focus in domestic market for optimization of refine ry margin

8

29% 31%

59% 58%

H1FY11 Q2FY10

78%83%

22%17%20%

30%

40%

50%

60%

70%

80%

90%Domestic Export

White Oil

Sales Mix : White & Black Oil

17%

0%

10%

20%

June , 2010 Sept, 2010

� Domestic Sales of White Oil increased to

� Export Sales of Black Oil ( mainly FO) increased

previous quarter due to replacement of

49%

22%

51%

78%

20%

30%

40%

50%

60%

70%

80%

90%Domestic Export

Black Oil

Sales Mix : White & Black Oil

0%

10%

20%

June , 2010 Sept, 2010

to 83% against 78% for previous quarter.

increased to 78% against 51% for

of FO by natural gas in domestic industry

9

Expansion of Retail Network

1340 1376

1200

1400

1600

1800

Retail Outlets

1000Q1 Q2

� No of Retail Outlets increased to 1376

� No of Retail Outlets under various stage of constru ction :195

� Target to reach to 1700 Retail outlets by March, 20 11

Expansion of Retail Network

1571

1700

Retail Outlets

Q3 Q4

No of Retail Outlets increased to 1376

No of Retail Outlets under various stage of constru ction :195

Target to reach to 1700 Retail outlets by March, 20 11

10

26,320

41,591

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Motor Spirit

58%

Capitalise on Retail Growth Opportunity

-

5,000

10,000

Q1FY11 Q2FY11

� Retail Sales increased to Rs 752 Crore from Rs 536 crore on account of more

than 50% growth in Motor Spirit.

� Anticipated full deregulation of Auto Fuel to provi de an opportunity to increase

Retail Sales & Profitability.

114,585

130,750

70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

High Speed Diesel

14%

on Retail Growth Opportunity

Qty : Metric Tones

50,000

60,000

70,000

Q1FY11 Q2FY11

Retail Sales increased to Rs 752 Crore from Rs 536 crore on account of more

Anticipated full deregulation of Auto Fuel to provi de an opportunity to increase

11

Refinery Expansion

12

Expansion to 18 MMTPA

Complexity to improve to 11.8 from 6.1

� Overall progress : 68.40%

� Engineering : 97.22%

� Procurement : 73.69%

Construction : 55.06%

Refining Expansion - Phase I

� Construction : 55.06%

� 100% purchase order done for long lead Items

� Zero Loss Time Injury

� Cost : within Budget

� All units on schedule except two units

Phase I

100% purchase order done for long lead Items

13

Upgradation of existing unit

� Overall Progress : 85.24%

� Out of 126 equipments, 102 equipments

� Equipments erected : All equipmentsneed to be erected during refinery integration

14

Upgradation of existing unit – CDU/VDU

equipments received at site

equipments erection completed, except those whichintegration shutdown

Delayed Coker Unit


� Two Coker drums received & two drums are expected b y end of October, 2010

� Major equipments erected : Coker fractionators, De butanizer, Absorber, Stripper,

LCGO (Light cycle gas oil stripper), HCGO (Heavy cy cle gas oil Stripper)

� Out of 264 equipments, 136 equipments received

� Project Schedule currently lagging by a quarter; be ing monitored

Two Coker drums received & two drums are expected b y end of October, 2010

Major equipments erected : Coker fractionators, De butanizer, Absorber, Stripper,

LCGO (Light cycle gas oil stripper), HCGO (Heavy cy cle gas oil Stripper)

Out of 264 equipments, 136 equipments received

Project Schedule currently lagging by a quarter; be ing monitored

15

ISOM Unit (Isomerization unit)


� Major equipments erected- Stabilizer, Net Gas Scrubber, LPG Stripper

Deisohexanizer, Methanator Reactor, Feed surge drum


(Isomerization unit)

Deisohexanizer column

Stabilizer, Net Gas Scrubber, LPG Stripper

Deisohexanizer, Methanator Reactor, Feed surge drum


16

VGO – HT (Vacuum gas oil Hydrotreater Unit)



� Major equipments erected : Kerosene Stripper, Die sel Stripper, MP Medium

pressure Off Gas Stripper, LP Low pressure Off Gas Scrubber

� Project Schedule currently lagging by a quarter; be ing monitored

HT (Vacuum gas oil Hydrotreater Unit)


Major equipments erected : Kerosene Stripper, Die sel Stripper, MP Medium

pressure Off Gas Stripper, LP Low pressure Off Gas Scrubber

Project Schedule currently lagging by a quarter; be ing monitored

17

DHDT Unit (Diesel Hydrotreater Unit)

Overall Progress : 65.60%


Major equipments erected : Recycle gas compressor, Recycle gas scrubber,

Stripper, Product fractionators, Feed surge drum.

DHDT Unit (Diesel Hydrotreater Unit)


Major equipments erected : Recycle gas compressor, Recycle gas scrubber,

Stripper, Product fractionators, Feed surge drum.

18

Desalination Unit : 85% Erection CompletedDesalination Unit : 85% Erection Completed

Pipe Racks : 54% completed

PIPE RACK

Pipe Racks : 54% completed

PIPE RACK

Supporting Infrastructure Facilities & Utilities : Power Plant & Terminal Facilities

Power Plants (Owned by Essar Power)

� Existing : 77 MW & steam @ 230 TPH

� Expansion : 220 MW & steam @ 630 TPH

Ports & Terminals (Owned by Essar Shipping Ports & Logistics limited)

Current facilities

� 5 road gantries & one rail gantry : 7 mmtpa

� 1 Berth at Jetty for product evacuation : 7 mmtpa

� 1 SPM with crude intake capacity : 27 mmtpa

� Tankages, Pipelines & other facilities

New Additional facilities

� 5.5 mmtpa tankages facilities : under progress

� 1 Berth at existing jetty : 7 mmtpa, completed

� 1 Road Gantry : completed


21


Power Plants (Owned by Essar Power)

� Existing : 77 MW & steam @ 230 TPH

� Expansion : 220 MW & steam @ 630 TPH

Ports & Terminals (Owned by Essar Shipping Ports & Logistics limited)

Current facilities

� 5 road gantries & one rail gantry : 7 mmtpa

� 1 Berth at Jetty for product evacuation : 7 mmtpa

� 1 SPM with crude intake capacity : 27 mmtpa

� Tankages, Pipelines & other facilities

New Additional facilities

� 5.5 mmtpa tankages facilities : under progress

� 1 Berth at existing jetty : 7 mmtpa, completed

� 1 Road Gantry : completed


22

CBM ProjectCBM Project

23

Leading CBM Gas Player in IndiaLeading CBM Gas Player in India

Details of CBM Block Place Ownership Acreage resources

Raniganj West Bengal 100% 500 Sq km

Rajmahal Jharkhand 100% 1128 sq. km

Sohagpur M.P. & Chhattisgarh 100% 339 sq. km

Talcher Orissa 100% 557 sq. kmTalcher Orissa 100% 557 sq. km

IB Valley Orissa 100% 209 sq. km

Total 2733 sq km

� Leading CBM player in the country with 2733 sq km o f acreage & more than 10 TCF

of reserve & resources in place under five blocks.

� Presence in major key market deficient in natural g as supplies.

� Petroleum Exploration License applications

submitted to respective state governments

� Prefeasibility report for Environment Impact

Leading CBM Gas Player in IndiaLeading CBM Gas Player in India

2P/ 2C resources

Best estimate

prospective resources

Unrisked in-place resource

TotalRemarks

Bcf Bcf Bcf Bcf

201 792 - 993 CPR by NSAI (2010)

- 4,723 - 4,723 CPR by ARI (2010)

600 600 As per DGH

2,600 2,600 As per DGH2,600 2,600 As per DGH

- - 1,200 1,200 As per DGH

201 5,515 4,400 10,116

Leading CBM player in the country with 2733 sq km o f acreage & more than 10 TCF

of reserve & resources in place under five blocks.

Presence in major key market deficient in natural g as supplies.

applications for all 4 blocks (recently awarded)

governments .

Impact studies is being prepared for 4 blocks24

Drilling Wells at Raniganj

� Significant progressachieved in drilling CBMwells – Core holes /Informations wells &Surface holes & Verticalwells at Raniganj duringlast 6 months

20

23

18

19

20

21

22

23

24

March, 2010 Sept, 2010

Core Holes

5960

80Surface hole

15

31

0

10

20

30

40


Vertical Wells

9

0

20

40

60


25

Raniganj CBM Block : Hydrofracturing

Hydrofrac Unit

� Hydrofacturing completed : 3 wells

� Hydrofracturing under progress : 1 wells

Raniganj CBM Block : Hydrofracturing

Hydrofracturing under progress : 1 wells

26

Resources : Rigs / Equipments & Manpower

Core Drilling Rig Water Well Drilling Rig

� Total Number of Rigs deployed at Raniganj

� More Number of Rigs being deployed : 5 Rigs

� Team of 100 engineers, geoscientists & technical st aff with significant experience

in the field of execution & operation of CBM projec ts.

Resources : Rigs / Equipments & Manpower

Water Well Drilling Rig Air Drilling Rig

Raniganj : 8 Rigs

More Number of Rigs being deployed : 5 Rigs

Team of 100 engineers, geoscientists & technical st aff with significant experience

in the field of execution & operation of CBM projec ts.

27

Marketing & Distribution of CBM Driers and Surge Vessel

Pipeline under Construction

Marketing & Distribution of CBM CNG Station

� Gas sales commenced through Cascades.

� GSPA Signed up with Matix Fertilizers & Phillips Carbon Black.

� Pipeline Construction in full swing; expected to be commissioned by Nov,10

� Developing Pipeline Network in Durgapur

28

� Funding Tied up for first phase ( 144 wells)

� Project cost : Rs. 819 crore

� Debt : 573 crore & Equity : 246 crore (

� Term Loan tied up from SBI, IOB & Axis

Raniganj: Financial Closure

� Term Loan tied up from SBI, IOB & Axis

� Interest Rate @ 11% p.a.,11 years tenor

wells) completed:

70%: 30%)

Axis Bank as a part of consortium lenders

Closure

Axis Bank as a part of consortium lenders

tenor

29

Financial Performance

3030

Particulars QE

Sep-09

Throughput - Million Tonnes 3.63

INCOME

Income from operation 11,144

Less : Excise duty & Taxes 1,580

Net Income from operation 9,564

Other Income 41

Total Income 9,605

Financial Results

EXPENDITURE

Cost of Goods Sold 9,039

Operating Expenditure 286

Forex Loss/( Gain) (80)

Total Expenditure 9,245

EBITDA 360

Interest & Finance Charges 289

Operational Cash Profit 71

Depreciation 183

PBT (113)

Tax (19)

PAT (94)

Current Price GRM $ 2.41

Current Price GRM ( with STI) $ 4.24

QE HYE HYE 2009-10

Sep-10 Sep-09 Sep-10

3.69 6.39 7.37 13.50

12,415 19,039 24,464 42,402

1,507 2,914 3,024 5,897

10,909 16,125 21,440 36,505

55 80 94 211

10,964 16,205 21,534 36,716

( Rs in Crore )

10,120 14,846 19,912 34,251

325 578 686 1,188

(115) (245) (106) (661)

10,330 15,179 20,493 34,778

634 1,027 1,041 1,938

306 574 605 1,181

329 453 437 757

184 363 365 728

144 90 71 29

14 14 12 (1)

130 76 60 29

$ 4.65 $1.93 $4.07 $1.60

$ 6.49 $3.94 $6.14 $3.70

31

Current Price GRM : Methodology

In line with international best practices, EOLprice GRM (CP GRM) is computed based on following

� Quantity of crude processed/products producedcomputing CP GRM.

� Crude cost is taken at prevailing Crude prices

� Product prices for both domestic and exportagainst past period prices applicable for domestic

� CP GRM does not include Hedging gains/losses

� CP GRM includes sales tax benefit on actual basis

This method of reporting CP GRM is appropriate

� It provides common base to compare with benchmarkreport on Current Price basis.

� The volatility in GRM due to inventory price changes

� CP GRM reduces exchange conversion impact

This practice of CP GRM is adopted by Essar Energy

Current Price GRM : Methodology

EOL reports GRM on Current Price basis. Currentfollowing methodology:

produced during current period are considered for

as against FIFO based prices taken in the books

sales are taken based on current period prices asdomestic sales in the books

32

gains/losses

basis

appropriate as:

benchmark GRM and GRM of other refiners which

changes are eliminated

impact

Energy plc and is well received by the investors.

Comparative GRM

$4.24 $4.00

$5.00

$6.00

$7.00

EOL - Current Price GRM

$4.24

$1.56

$3.14 $1.90

$-

$1.00

$2.00

$3.00

$4.00

QE Sep09 QE Dec09 QE Mar10

$5.37

$5.79

$6.49

$4.94

Dubai (Cracking) S'pore GRM Reuters

33

33

$3.68

$4.24

QE Mar10 QE Jun10 QE Sep 10

Essar Oil – Financial Indicators

Particulars 30-Sep-10

Debt

Refinery 7,438

Expansion 2,622

E&P & Others 865

Total Debt 10,925

Equity 5,943

FCCBs 1,205

Debt/Equity Ratio 1.53

Ticker (BSE / NSE) ESSAROIL

Number of Shares (mn) 1365.66

Promoter’s Ownership

( including GDS)

89.96%

Free Float 10.04%

Market Capitalization 3,859

Debt/Equity Ratio 1.53

Average cost of debt c 10.5% - 11%

Financial IndicatorsAll fig in Rs Crore unless mentioned otherwise

• Total cash spent including bills accepted uner L/Cs: Rs 5680 crore

• LCs opened, yet to be utilized : Rs 1818 crore

Expansion 30-Sep-10

Equity/Internal Accruals 3105

Debt 4393

Total 7,498

Working Capital 30-Sep-10

621

3777

5994

FY11 FY12 – FY16 FY16 onwards

Debt Maturity Profile

34

Short Term Loan 1868

Crude Liabilities 5,690

Total 7,558

AnnexureAnnexure

Delayed Coker Drums & StructureDelayed Coker Drums & Structure

Refinery Expansion – DCU Overview

Coke drums table top

Heater Erection

DCU Overview

Heater Erection

Refinery Expansion- DCU overviewDCU overview

Refinery Expansion- DCU overview DCU overview

Refinery Expansion- ISOM


ISOM


41

Refinery Expansion- DHDT

Stripper

DHDT

Refinery Expansion- VGO HDT

Train- 1 Heat exchangers

Train-B Exchangers

VGO HDT

1 Heat exchangers

Refinery Expansion- VGO HDT

Heater erection

Recycle gas scrubber

VGO HDT

137C-001

Recycle gas scrubber

Refinery Expansion- ISOM

Fin fan cooler erection

ISOM


Refinery Expansion- ISOM ISOM

46

Refinery Expansion- DHDT

Heater erection

DHDT


Erection of Equipment for VGOVGO-HDT

Transportation of three Vessels of DESALINATION unitthree Vessels of DESALINATION unit

Refinery Expansion Overview Refinery Expansion Overview

Product & Intermediate TanksProduct & Intermediate Tanks

931

40176

1500

2000

2500

Oil Gas

Essar Oil – Exploration & Production

Reserves & resources (mmboe) (a)

1

2

High impact E&P platform

3

1012

971 2132

63

963

1957

87

49

0

500

1000

2P & 2C

Contingent

Resources

Best Estimate

Prospective

Resources

Unrisked /

Inplace

Resouces

Total Resources

� Total investment to date c.US$160mm

(a) Subject to necessary approvals. Please refer to next slide for further details

Source: Company information, ARI, RPS Energy, NSAI

6

5

7

4

150

1012

Exploration & Production

Key highlights

Diverse portfolio of offshore and onshore oil & gas blocks

Developing as a leading CBM player - lower risk and with

significant demand and exciting growth profile

Attractive economics for onshore CBM resources versus offshore

gas in India - favourable fiscal terms and lower opex and capex

International and other domestic – Unrisked/in-place resources of

over 238 mmboe

Sohagpur, Talcher & IB valley CBM blocks- 4.4 tcf inplace resources

as per DGH estimates

Raniganj –2C and best estimate prospective resources: 993bcf CSG;

commercial production by end 2010; gross peak production:

3.5mmscm/d

54

Rajmahal – Best estimate prospective resources: 4.7tcf (CBM)

A high impact, Indian-led E&P platform

Nigeria(c)(e)

� 100% interest in offshore block OPL 226 – in discussion with local partner to farm down to

Mehsana(a)

� 70% interest (ESU)

� 2P reserves: 2mmbbl (oil)

� Potentially significant

CBM play

Ratna /R Series(d)

� 50% interest

� 2C resources: 81mmboe

(92% oil, 8% gas)

� Commercial production: Q4

CY2013(d)

� Expected gross peak

production: 35kbbl/d

local partner to farm down to 63%

� 2C and best estimate prospective resources (based on 63% interest): 126mmboe (f)

(48% oil) CPR by NSAI (2010)

SP(NE)-CBM-2008/IV

� 100% interest in

block

TL-CBM-2008/IV

IB-CBM-2008/IV

� 100% interest

in these 2

blocks

Note: Reserves and resources data is working interest, adjusted to reflect Essar Oil’s interest

(a) Signed PSC for Oil; CBM rights subject to government approval and modification in government policy

(b) Awarded by GOI under CBM IV round

(c) Signed PSC

(d) PSC expected to be signed shortly, which is subject to a government approval process

(e) Subject to necessary approval for transfer to Essar Oil

(f) c.22mmboe (2C) of gas classified as development not viable

(g) Relates to 2C and best estimate prospective resources

Source: Company information

led E&P platform

Rajmahal(b)


CBM block

� Best estimate prospective

resources: 4.7tcf CBM gas

(787mmboe)

� CPR by ARI (2010)

Vietnam(e)


block 114

� Unrisked/undiscovered

in-place resources: 1.0tcf

gas (167mmboe)

55

Raniganj(c)

� 100% interest

� 2C and best estimate

prospective resources: 993bcf

CBM gas (165mmboe)

� Trial production: Q2 CY2010

� Expected gross peak

production: 3.5mmscm/d (g)

� CPR by NSAI (2010)

Unrisked Rresources

2P reserves/ 2C and prospective resources

Other Assets

� Assam (e) (100% interest):

Unrisked/undiscovered in-place

resources: 10mmboe (oil)

� Mumbai Offshore (e) (50% interest):


resources: 186bcf (31mmboe)

� Indonesia (e) (49.5% interest):


resources: 30mmbl (oil)

� Madagascar(e)

� Australia(e)

� SP(NE)-CBM-2008/IV,

TL-CBM-2008/IV, IB-CBM-2008/IV(b)

SP(NE)-CBM-2008/IV(b)

100% interest in

TL-CBM-2008/IV(b)

IB-CBM-2008/IV(b)

100% interest

Details of Major E&P blocks with reserves and resource estimates

Assets Ownership

2P/ 2C resourcesBest estimate prospective

resources

Oil Gas Total Oil Gas Total

mmbbl Bcf mmboe mmbbl Bcf mmboe

Raniganj (CBM) 100% - 201 33-

792

Rajmahal (CBM) 100% -- - -

4,723Rajmahal (CBM) 100% -- - -

4,723

Mehsana 70% (b) 2 - 2 - -

Ratna/ R-Series 50% (a) 74 40 81-

Nigeria 63% (c) 11 136 33 49 264

Total 87 377 149 49 5779 1012

(a) For Ratna / R-Series, balance 50% is held by ONGC (40%) and Premier Oil (10%)

(b) For Mehsana (ESU oil field), balance 30% ownership is held by ONGC

(c) In discussion with local partner to farm down to 63%

Details of Major E&P blocks with reserves and resource

Best estimate prospective Capex Comments

Total (US$ mn) Opex Peak Prodn.

mmboe

132 439$0.43/

mmbtu 3.5 mmscm/d

Test production commenced.

Moving to commercial

development

787 4Large acreage. Situated in rich

coal belt

56

787 4coal belt

- 4 - -Potentially significant

CBM play

- 568 $5.3/bbl 35k bbl/d

Discovered fields.

Development to commence

post signing of PSC

93 16Located in proven Nigerian

petroliferous basin

1012

Series, balance 50% is held by ONGC (40%) and Premier Oil (10%)

(b) For Mehsana (ESU oil field), balance 30% ownership is held by ONGC

Raniganj – low risk development to serve in Eastern India’s gas deficit industrial belt

Field overview

57

Source: Company information, NSAI

Production profile

Note: FY ended March 31st. Production profile reflects both 2C and best estimate prospective resources

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25

FY26

FY27

FY28

FY29

FY30

FY31

FY32

FY33

FY34

FY35

FY36

FY37

FY38

FY39

FY40

FY41

FY42

Pro

duct

ion

(mm

scm

/d)

low risk development to serve in Eastern India’s

Resources

� Onshore block, located in Damodar Valley coal

field in Raniganj region of West Bengal

� 993bcf (165mmboe) of 2C and best estimate

prospective resources (CBM gas), CPR by NSAI

Interest /operator

� 100% interest & operatorship with EOL

Current status� 23 information wells and 31 production wells

drilled; gas production started.

Key milestones� 500 wells to be drilled over the life of the asset

� Commercial production expected by December

2010

Government take

� Royalty at the rate of 10% of well-head price

� Production level payments (PLP) linked to a Government take and pricing

� Production level payments (PLP) linked to a

percentage of revenue & payable to the

Government of India, actual production

Capex to full development

� Capex to full development: c.US$439mn

� to be funded 70/30 debt/equity

� capex figure reflects estimated expenditure for

both 2C and prospective resources

Opex guidance � US$0.43/mmbtu

Capex guidance & phasing

� CY 2010 : c.US$97mn (net share)

� CY 2011 : c.US$131mn (net share)

Other � Cost/well: US$0.63mn

Evacuation � Pipeline being built (48 KM)

Customers� Philips Carbon, Matix Fertilizers already

signed up

Essar Energy – Refining

1

2

3

Capacity (MT)

Current March 2011

1418

36

Increasing capacity and complexity

5

4

7

6

Total cumulative

capex( US$2.7bn US$4.4bn US$9.15bn

Total incremental

capex – US$1.7bn US$4.75bn

Complexity: 6.1 11.8 12.8

API (density) avg.: 31.3 24.8 24.0

Sulphur % avg.: 1.6% 3.0% 3.0%

Product grade: Euro III/IV Euro IV/V Euro V/

US Spec/

CARB

TodayPost

Phase IPost

Phase II

Key highlights

Low cost, safe and efficient operations – refinery operating

cost US$1-2 per barrel lower than global peers

Strategically located on the west coast of India

Increasing complexity from 6.1 to 11.8 following Phase

1, enhancing crude and product flexibility

58

Vadinar currently one of India’s largest refineries: will be

amongst the top 5 globally at 750k bbl/d post Phase 2

Crude slate geared towards heavy crudes (89% of crude mix

comprises of heavy and ultra-heavy crude) post phase - I

Expansion at competitive capex cost; cost/complexity/bbl of

$1011 and $962 post Phase I & Phase II respectively

Timing for Phase 2 to be determined based on a review of

market conditions and attainment of financial closure

Expansion at highly competitive capex

New grass roots refineries – capacity vs capex

40,000

50,000

60,000

Note: The timing for Phase 2 will be finished based on a review of market condition and attainment of financial closureSource: KBC, Company information

0

10,000

20,000

30,000

0 100 200 300 400 500 600 700 800

Cap

ex (

$/bp

d)

Capacity (kbp/d)

World average: US$23,400/bpd

Essar Energy current

Essar Energy post phase 1

Essar Energy post phase 2

Expansion at highly competitive capex

New refineries capex – country average

20,000

25,000

30,000

59

Note: The timing for Phase 2 will be finished based on a review of market condition and attainment of financial closure

0

5,000

10,000

15,000

World average

China Saudi Arabia

India Essar Energy current

Essar Energy

post phase I

Essar Energy

post phase II

Cap

ex (

$/bp

d)

Top quartile cost performer globally

3.65

2.25

1.331.5

2

2.5

3

3.5

4

Cos

t (U

S$/

bbl)

Total costs (US$/bbl)Manpower costs

(US$/bbl)Asset management

costs (US$/bbl)

(a) In addition to the above refinery operating costs, additional costs of US$0.96/bbl were incurred for product handling chargesNote: Categorisation of average and Laggard refineries as per KBC analysis. Laggards representative of fourth quartile performa

Asset management costs comprise costs of shutdown, turnaround, equipment maintenance and repair, and other routine maintenanc

Source: KBC

1.331.15

0.70

0.30

1.06

0.64

0.15

0

0.5

1

Lag

gar

ds

Ave

rag

e

Ess

ar E

ner

gy

Lag

gar

ds

Ave

rag

e

Ess

ar E

ner

gy

Lag

gar

ds

Ave

rag

e

Ess

ar E

ner

gy

Top quartile cost performer globally

60

Operations variable costs (US$/bbl)

Purchased energy costs (US$/bbl)

Other overhead costs (a) (US$/bbl)

In addition to the above refinery operating costs, additional costs of US$0.96/bbl were incurred for product handling charges and other corporate and marketing expenses during FY09Categorisation of average and Laggard refineries as per KBC analysis. Laggards representative of fourth quartile performance. Essar Energy costs relate to 2009/10 operational costs as estimated by KBC. Asset management costs comprise costs of shutdown, turnaround, equipment maintenance and repair, and other routine maintenance. Operations costs relate to costs associated with catalysts, chemicals and demurrages

0.74

0.450.31

0.39 0.390.26 0.31

0.20 0.19

Lag

gar

ds

Ave

rag

e

Ess

ar E

ner

gy

Lag

gar

ds

Ess

ar E

ner

gy

Ave

rag

e

Lag

gar

ds

Ave

rag

e

Ess

ar E

ner

gy

10.30

11.60

6.00

8.00

10.00

12.00

14.00

16.00

Indian Complex Refinery

Competitive gross refining margin

GR

M (

US

$/b

bl)

6.48 6.11

-

2.00

4.00

6.00

2006 2007

GRMs expected to improve with increased complexity and capacity

Utilization of Mangla Crude, Natural Gas & Coal to further boost the GRM

15.00

12.20

6.60 7.66

Singapore Complex Margin

Competitive gross refining margin

US$ 7.34/bbl

Average premium: US$5.23/bbl

7.66

5.79

3.49

2008 2009 2010

61

with increased complexity and capacity

Utilization of Mangla Crude, Natural Gas & Coal to further boost the GRM

Ultra-heavy64%

Light28%

Heavy52%

Ultra-heavy20%

Expansion to provide crude as well as product flexibilityC

rud

e m

ix

14MT

(current)

18MT

(expected post phase 1 expansion)

Middle distillates

49%

Heavy end15%

Light distillates

22%

Fuel loss6%

Middle distillates

47%

Heavy end25%

� Processing an increasingly high proportion of high sulphur and low API crudes

� Focus on delivery of higher margin products (middle/light distillates)Note: Ultra-heavy crude defined as having API<25, heavy crude with API 25 – 33, light crude with API>33

Dar and Mangala crude with high tan and wax content classified as heavy crude

Product yield – fuel and loss does not include natural gas

Source: Company information

Pro

du

ct y

ield

14MT

(current)

18MT


Light6%

Heavy31%

Ultra-heavy63%

Light11%

Heavy25%

Expansion to provide crude as well as product flexibility

18MT


36MT


Light distillates

29%

Propylene3%

Fuel loss5%

Middle distillates

48%

Heavy end15%

Light distillates

22%

VGO10%

Fuel loss4%

62

Processing an increasingly high proportion of high sulphur and low API crudes

Focus on delivery of higher margin products (middle/light distillates)

18MT


36MT


8.8

1.5

LPG/Naptha

Gasoline

Diesel

� Conversion of entire negative margin fuel oil into high value added products and pet coke

� Building higher flexibility between light and middl e distillates

� Flexibility to produce petrochemical feed stock

� Euro IV & V grade at 87% in Gasoline pool and 78.4% in Diesel pool

Yield to shift to higher grade products…optimal for export markets

0.90.7

1.90.82.0 0.5

1.01.8

4.1

2.7

0.6

0.6

1.01.2

3.9

5.6

7.7

13.6

2.3

2.5

0.7

1.4

14 MT 18MT 36 MT

Jet/Kero

Fuel Oil

Coke

Propylene

Others

Fuel& Loss / Residue

Note: Others include bitumen, sulphur and HDT VGOSource: Company information

Euro III13.0%

Euro IV37.0%

Euro V49.9%

Conversion of entire negative margin fuel oil into high value added products and pet coke

Building higher flexibility between light and middl e distillates

Euro IV & V grade at 87% in Gasoline pool and 78.4% in Diesel pool

Gasoline: 8.8 MT

Yield to shift to higher grade products…optimal for

63

Euro III21.5%

Euro V31.2%

Euro IV47.2%`

Diesel: 13.6 MT

Thank YouThank YouThank YouThank You

essar oil limited · 3 current price grm $ 6.49/bbl as against $ 4.24 5 4 ramped up processing of...

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