Essar Oil confident on refinery growth

By Hiral Vora and Jonathan Leff

MUMBAI (Reuters) - India's Essar Oil Ltd (ESRO.BO: Quote, Profile, Research, Stock Buzz) is confident that it will more than quadruple its global refining capacity within the next seven years, despite hitting hurdles in a proposed Iran deal, its top executive said on Wednesday.

Essar Oil, part of the Ruia family-owned Essar Group, whose interests include steel, power, shipping and telecoms, is aiming to have capacity of 1 million barrels per day, with two-thirds of that in India, where it has embarked on the $6 billion expansion of its sole refinery, managing director Naresh Nayyar said.

"The balance, 300,000 bpd, we're looking into different opportunities outside India," Nayyar, who joined the company six weeks ago, said at the Reuters India Investment Summit.

Essar, the second-largest private refiner in India, announced plans last month to expand capacity at its 210,000 bpd refinery in the western state of Gujarat to 680,000 bpd by 2010.

Asian and Middle East nations are building more than a dozen new refineries to feed demand in developed nations, where there has been little capacity expansion in recent years. But many projects have been slowed by surging costs, material shortages and a lack of manpower among the contractors who build the units.

Despite this, and the company's difficulty in completing its first project over about a decade, Nayyar was confident of meeting the mid- or third-quarter 2010 target.

The firm would use Essar Construction's workforce, who had just completed the plant, and expects to place orders for key equipment before the year-end.

Essar Oil shares ended up 0.9 percent up at 300.30 rupees in a Mumbai market that closed 1.1 percent higher.  Continued...