Essar slashes R-LNG purchases to cut costs

Vol 17, PW 15 (13 Mar 14) Midstream & Downstream

Essar Oil wants to cut costs at its 20m t/y refinery in Gujarat by slashing R-LNG purchases over the next three years.

From July this year Essar will substitute up to 300,000 cm/d R-LNG with gas produced from the oil refining process. "We want to use the saturated gas that comes out as feedstock for the hydrogen manufacturing unit,” Essar Oil managing director LK Gupta tells us.

Till now Essar has been buying up to 1.2m cm/d of R-LNG at $20/mmbtu from GSPC, GAIL, IndianOil and Bharat Petroleum, sourced from Dahej supplied through a Gujarat State Petronet (GSPL) pipeline where Essar has booked up to 2.5m cm/d capacity. Gupta says substituting some R-LNG with ‘saturated refinery fuel gas’ is just one step Essar is taking to increase efficiency and cut costs.

Essar also aims to produce high value diesel from the 1.5m t/y to 2m t/y surplus vacuum gas oil (VGO) which it currently exports. Also imminent is a 100,000 cm/hour hydrogen manufacturing unit to convert 90% of this VGO into high-value diesel and the rest into naphtha and kerosene.

Denmark’s Haldor Topsoe is the licensor for this additional hydrogen unit, which with the diesel maximisation project will cost $250m. UK-headquartered energy consultant KBC Advanced Technologies is helping Essar with energy conservation at the refinery.

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