Strong performance of refinery fuels Essar Oil

Essar Oil rose 1.10% to Rs 243.65 on reports that the company’s 2.10 lakh barrels per day refinery in Vadinar, Gujarat is running at full capacity ahead of planned schedule of end-March 2008.

On BSE 13.95 lakh shares were traded in the counter. The scrip had an average daily volume of 60.05 lakh shares in the past one quarter.

The stock hit a high of Rs 248.30 and a low of Rs 238.25 so far during the day. The stock had a 52-week high of Rs 360 on 1 January 2008 and had touched a 52-week low of Rs 47.80 on 6 August 2007.

The mid-cap scrip outperformed the market over the past one month till 3 March 2008, gaining 4.52% compared to the Sensex’s decline of 8.58%. However it underperformed the market in the past one quarter, declining 19.12% compared to Sensex’s decline of 14.60%.

The company’s current equity is Rs 1201.45 crore. Face value per share is Rs 10.

Meanwhile other media reports indicated that a consortium of Essar Oil, Adani group and Gujarat State Petroleum Corporation plan to spend Rs 10,000 crore to build a liquefied natural gas regassification terminal at Mundra in Gujarat. The 10 million tonne per annum terminal is likely to come up alongside the Mundra port and facilitate the movement of LNG ships into the terminal.

On 15 January 2008, Essar Oil’s subsidiary Essar Energy Overseas entered into an agreement to acquire 50% stake in Kenya Petroleum Refineries in Mombasa, Kenya. Essar Energy Overseas will acquire the stake from Shell Petroleum, Chevron Global and BP Africa. The Kenyan government holds the remaining 50% stake in the project.

Kenya Petroleum Refineries (KPRL) is a four million metric tonnes per annum (MMTPA) refinery. Its products are sold into the Kenyan market and exported to neighboring countries including Tanzania, Uganda, Burundi and Rwanda. Demand for petroleum products in these markets is estimated at five million tonnes per annum.

Essar Oil has three main divisions -- energy, offshore exploration and petroleum products. Its offshore division undertakes construction related to the oil industry for extraction of oil and/or gas reserves.

Essar Oil reported a net loss of Rs 13.40 crore in Q3 December 2007 as against net profit of Rs 0.12 crore in Q3 December 2006. Net sales rose 7.20% to Rs 147.03 crore in Q3 December 2007 over Q3 December 2006.