Essar Oil signs MoU with Indian oil corporation

Mumbai: Essar Oil signed a Product Sale, Purchase and Infrastructure Sharing MoU with Indian Oil Corporation, having earlier signed similar pacts with the other two PSU oil companies, HPCL and BPCL.

This is part of the company’s strategy to directly sell its product through long term tie-ups with consumers and through its own distribution network in the overseas markets.

The company operates a 10.5 million tonne refinery in Gujarat, with over 1,500 retail stations. The company has put up on its drawing board plans to increase its refinery capacity to 34 million tonnes.

Indian Oil, which is currently in net deficit in product in certain regions, will now be able to feed its domestic markets in the western and eastern regions by having access to Essar Oil’s product and infrastructure on the west coast. An estimated quantity of two million tonnes of motor spirit, High Speed Diesel and SKO (Superior Kerosene Oil) is projected to be lifted by IOC by various modes in 2008-09.

With the signing of this MoU, Essar Oil has MoUs or agreements covering close to seven million tonnes of its refinery products.

Mr Naresh Nayyar, the company’s Managing Director, said it would sell most of the diesel in the domestic market and export the refinery’s petrol and fuel oil. “LPG and Kerosene from the refinery will be entirely sold domestically,” he said.

The company is looking at setting up fuel distribution network in the West Asian and African markets. “East Africa is a major market for petroleum products and Essar Oil is essentially looking at countries were products can be moved economically,” according to Mr Nayyar.