Essar Shipping Limited. · NSE:ESSARSHPNG
Essar Shipping — Essar Oil — Q2 FY2010-11 Earnings Presentation
65 slides from Essar Shipping's earnings presentation, Oct 19, 2010
Slide 1: Essar Oil Limited Analyst Presentation
Essar Oil Limited Analyst Presentation 19th October, 2010
Slide 2: Agenda of Presentation
Agenda of Presentation Highlights for Q2 FY 2010-11 2010 : Mr. Naresh Nayyar Refinery Operation : Mr. P. Sampath Refinery Expansion : Mr. Naren Vachharajani CBM Project : Mr. Shailendra Singh Financial Performance : Mr. P. Sampath Annexure : Expansion Photographs
Slide 3: Highlight: Q2 FY 2010-11
Highlight : Q2 FY 2010 2010-11 2
Slide 4: Highlights (Q2 FY 2010-11)
Highlights ( Q2 FY 2010 - 11) 1 Optimization of Capacity with highest ever throughput achieved : 3.69 MMT 2 Gross Revenue of Rs. 12415 crore; Domestic & Export Ratio : 69% & 31% 3 Current Price GRM $ 6.49/bbl as against $ 4.24 24/bbl for corresponding quarter ended Sept - 09 4 Ramped up processing o
Slide 5: Refining Operation
Refining Operation ENERGY
Slide 6: Optimisation of Capacity
Optimisation of Capacity Qty : MMT 14 13.50 12 10 8 7.37 6.39 6 4 3.69 2 - H1FY10 FY10 H1FY11 Q2FY11 Highest ever throughput achieved 3.69 MMT, consistently operating above 14 mmtpa annualised capacity 5
Slide 7: Optimization of Crude Mix
Optimization of Crude Mix Crude Slate Ultra Heavy Heavy Light 100% 90% 18% 22% 19% 21% 80% 70% 60% 53% 47% 43% 50% 51% 40% 30% 20% 29% 34% 36% 10% 27% 0% Q2FY10 FY10 Q1FY11 Q2FY11 Processed more than 20 types of crudes including ultra heavy & tough crudes like Ras Gharib, Merey, Maya, Nowrooz Avg. A
Slide 8: Optimization of Product Mix
Optimization of Product Mix Product Slate Light Middle Heavy 100% 23% 24% 27% 26% 80% 60% 51% 49% 46% 47% 40% 20% 25% 27% 26% 27% 0% H1FY10 FY 2010 H1FY11 Q2FY11 Production of high margin middle & light distillates 7
Slide 9: Sales Performance
Sales Performance Sales Mix 100% Retail Bulk PSUs Exports 90% 80% 9% 70% 8% 8% 6% 8% 7% 60% 6% 4% 50% 40% 30% 64% 60% 59% 58% 20% 29% 31% 10% 25% 19% 0% H1FY10 FY2010 H1FY11 Q2FY10 Focus in domestic market for optimization of refinery margin 8
Slide 10: Sales Mix: White & Black Oil
Sales Mix : White & Black Oil White Oil Black Oil Domestic Export Domestic Export 90% 90% 83% 78% 78% 80% 80% 70% 70% 60% 60% 49% 51% 50% 50% 40% 40% 30% 30% 22% 22% 20% 17% 20% 10% 10% 0% 0% June , 2010 Sept, 2010 June , 2010 Sept, 2010 Domestic Sales of White Oil increased to 83% against 78% for p
Slide 11: Expansion of Retail Network
Expansion of Retail Network Retail Outlets 1800 1700 1600 1571 1400 1376 1340 1200 1000 Q1 Q2 Q3 Q4 No of Retail Outlets increased to 1376 No of Retail Outlets under various stage of construction :195 Target to reach to 1700 Retail outlets by March, 2011 10
Slide 12: Capitalise on Retail Growth Opportunity
Capitalise on Retail Growth Opportunity Qty : Metric Tones Motor Spirit High Speed Diesel 45,000 41,591 140,000 58% 14% 130,750 40,000 130,000 35,000 120,000 114,585 30,000 26,320 110,000 25,000 100,000 20,000 90,000 15,000 80,000 10,000 70,000 5,000 60,000 - 50,000 Q1FY11 Q2FY11 Q1FY11 Q2FY11 Retai
Slide 13: Refinery Expansion
Refinery Expansion ENERGY
Slide 14: Refining Expansion - Phase I
Refining Expansion - Phase I 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% 100% purchase order done for long lead Items Zero Loss Time Injury Cost : within Budget All units on schedule except two
Slide 15: Upgradation of existing unit – CDU/VDU
Upgradation of existing unit – CDU/VDU Overall Progress : 85.24% Out of 126 equipments, 102 equipments received at site Equipments erected : All equipments erection completed, except those which need to be erected during refinery integration shutdown 14
Slide 16: Delayed Coker Unit
Delayed Coker Unit Overall Progress : 63.12% Two Coker drums received & two drums are expected by end of October, 2010 Major equipments erected : Coker fractionators, Debutanizer, Absorber, Stripper, LCGO (Light cycle gas oil stripper), HCGO (Heavy cycle gas oil Stripper) Out of 264 equipments, 136
Slide 17: ISOM Unit (Isomerization unit)
ISOM Unit (Isomerization unit) Deisohexanizer column Overall Progress : 77.35% Major equipments erected- Stabilizer, Net Gas Scrubber, LPG Stripper Deisohexanizer, Methanator Reactor, Feed surge drum Out of 101 equipments, 82 equipments received 16
Slide 18: VGO – HT (Vacuum gas oil Hydrotreater Unit)
VGO – HT (Vacuum gas oil Hydrotreater Unit) Overall Progress : 70.35% Out of 177 equipments, 85 equipments received Major equipments erected : Kerosene Stripper, Diesel Stripper, MP Medium pressure Off Gas Stripper, LP Low pressure Off Gas Scrubber Project Schedule currently lagging by a quarter; be
Slide 19: DHDT Unit (Diesel Hydrotreater Unit)
DHDT Unit (Diesel Hydrotreater Unit) Overall Progress : 65.60% Out of 122 equipments, 55 equipments received Major equipments erected : Recycle gas compressor, Recycle gas scrubber, Stripper, Product fractionators, Feed surge drum. 18
Slide 20: Desalination Unit: 85% Erection Completed
Desalination Unit : 85% Erection Completed
Slide 21: Pipe Racks: 54% completed
Pipe Racks : 54% completed PIPE RACK
Slide 22: Supporting Infrastructure Facilities & Utilities
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 &
Slide 23: Supporting Infrastructure Facilities & Utilities
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 &
Slide 24: CBM Project
CBM Project ENERGY
Slide 25: Leading CBM Gas Player in India
Leading CBM Gas Player in India Leading CBM Gas Player in India Best Unrisked 2P/ 2C estimate Details of CBM in-place Total Place Ownership Acreage resources prospective Remarks Block resource resources Bcf Bcf Bcf Bcf Raniganj West Bengal 100% 500 Sq km 201 - 993 CPR by NSAI (2010) 792 Rajmahal Jha
Slide 26: Drilling Wells at Raniganj
Drilling Wells at Raniganj 24 Core Holes 23 23 22 21 20 20 19 18 March, 2010 Sept, 2010 Significant progress 80 Surface hole achieved in drilling CBM 60 59 wells – Core holes / 40 Informations wells & 20 Surface holes & Vertical 9 wells at Raniganj during 0 March, 2010 Sept, 2010 last 6 months 40 Ve
Slide 27: Raniganj CBM Block: Hydrofracturing
Raniganj CBM Block : Hydrofracturing Hydrofrac Unit Hydrofacturing completed : 3 wells Hydrofracturing under progress : 1 wells 26
Slide 28: Resources: Rigs / Equipments & Manpower
Resources : Rigs / Equipments & Manpower Core Drilling Rig Water Well Drilling Rig Air Drilling Rig Total Number of Rigs deployed at Raniganj : 8 Rigs More Number of Rigs being deployed : 5 Rigs Team of 100 engineers, geoscientists & technical staff with significant experience in the field of execut
Slide 29: Marketing & Distribution of CBM
Marketing & Distribution of CBM Driers and Surge Vessel CNG Station Pipeline under Construction 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
Slide 30: Raniganj: Financial Closure
Raniganj: Financial Closure Funding Tied up for first phase ( 144 wells) completed: Project cost : Rs. 819 crore Debt : 573 crore & Equity : 246 crore ( 70%: 30%) Term Loan tied up from SBI, IOB & Axis Bank as a part of consortium lenders Interest Rate @ 11% p.a.,11 years tenor 29
Slide 31: Financial Performance
Financial Performance ¢ ESSAR’ ENERGY 30 30
Slide 32: Financial Results
Financial Results ( Rs in Crore ) Particulars QE QE HYE HYE 2009-10 Sep-09 Sep-10 Sep-09 Sep-10 Throughput - Million Tonnes 3.63 3.69 6.39 7.37 13.50 INCOME Income from operation 11,144 12,415 19,039 24,464 42,402 Less : Excise duty & Taxes 1,580 1,507 2,914 3,024 5,897 Net Income from operation 9,5
Slide 33: Current Price GRM: Methodology
Current Price GRM : Methodology In line with international best practices, EOL reports GRM on Current Price basis. Current price GRM (CP GRM) is computed based on following methodology: Quantity of crude processed/products produced during current period are considered for computing CP GRM. Crude cos
Slide 34: Comparative GRM
Comparative GRM EOL - Current Price GRM Dubai (Cracking) S'pore GRM Reuters $7.00 $6.49 $5.79 $6.00 $5.37 $5.00 $4.24 $4.94 $4.00 $4.24 $3.68 $3.00 $3.14 $1.90 $2.00 $1.56 $1.00 $- QE Sep09 QE Dec09 QE Mar10 QE Jun10 QE Sep 10 33 33
Slide 35: Essar Oil – Financial Indicators
Essar Oil – Financial Indicators All fig in Rs Crore unless mentioned otherwise Particulars 30-Sep-10 Expansion 30-Sep-10 Debt Refinery Equity/Internal Accruals 3105 7,438 Expansion 2,622 Debt 4393 E&P & Others 865 Total 7,498 Total Debt 10,925 • Total cash spent including bills accepted uner L/Cs:
Slide 36: éver/ ac Anevement
éver/ ac Anevement . but the beginning of @ new journey / fa F rE! | A . | a ey —=., = = a * 4 ; ! = |;
Slide 37: Annexure
Annexure ENERGY
Slide 38: Delayed Coker Drums & Structure
Delayed Coker Drums & Structure
Slide 39: Refinery Expansion – DCU Overview
Refinery Expansion – DCU Overview Coke drums table top Heater Erection
Slide 40: Refinery Expansion- DCU overview
Refinery Expansion- DCU overview
Slide 41: Refinery Expansion- DCU overview
Refinery Expansion- DCU overview
Slide 42: Refinery Expansion- ISOM
Refinery Expansion- ISOM Deisohexanizer column 41
Slide 43: Refinery Expansion- DHDT
Refinery Expansion- DHDT Stripper
Slide 44: Refinery Expansion- VGO HDT
Refinery Expansion- VGO HDT Train-1 1 Heat exchangers Train-B Exchangers
Slide 45: Refinery Expansion- VGO HDT
Refinery Expansion- VGO HDT Heater erection 137C-001 Recycle gas scrubber
Slide 46: Refinery Expansion- ISOM
Refinery Expansion- ISOM Fin fan cooler erection
Slide 47: Refinery Expansion- ISOM
4 ESSAR’ Refinery Expansion- ISOM svar i. wel f , | tte ct ee ee | ae Dn ee 46
Slide 48: Refinery Expansion- DHDT
Refinery Expansion- DHDT Heater erection Fin fan cooler erection
Slide 49: Erection of Equipment for VGO
Erection of Equipment for VGO VGO-HDT
Slide 50: Transportation of three Vessels of Desalination unit
Transportation of three Vessels of DESALINATION unit
Slide 51: Refinery Expansion Overview
Refinery Expansion Overview
Slide 52: Refinery Expansion Overview
Refinery Expansion Overview
Slide 53: Refinery Expansion Overview
Refinery Expansion Overview
Slide 54: Product & Intermediate Tanks
Product & Intermediate Tanks
Slide 55: Essar Oil – Exploration & Production
Essar Oil – Exploration & Production High impact E&P platform Key highlights 2500 Reserves & resources (mmboe)(a) 1 Diverse portfolio of offshore and onshore oil & gas blocks 971 2132 Oil Gas 40 176 2000 Developing as a leading CBM player - lower risk and with 2 significant demand and exciting growt
Slide 56: A high impact, Indian-led E&P platform
A high impact, Indian-led led E&P platform Mehsana(a) Rajmahal(b) Vietnam(e) 70% interest (ESU) 100% interest in 100% interest in 2P reserves: 2mmbbl (oil) CBM block block 114 Potentially significant Best estimate prospective Unrisked/undiscovered CBM play resources: 4.7tcf CBM gas in-place resource
Slide 57: Details of Major E&P blocks with reserves and resource estimates
Details of Major E&P blocks with reserves and resource estimates Best estimate prospective 2P/ 2C resources Capex Comments resources Assets Ownership Oil Gas Total Oil Gas Total (US$ mn) Opex Peak Prodn. mmbbl Bcf mmboe mmbbl Bcf mmboe Test production commenced. $0.43/ Raniganj (CBM) 100% - 201 33 7
Slide 58: Raniganj – low risk development to serve Eastern India gas deficit
Raniganj – low risk development to serve in Eastern India’s gas deficit industrial belt Field overview Onshore block, located in Damodar Valley coal field in Raniganj region of West Bengal Resources 993bcf (165mmboe) of 2C and best estimate prospective resources (CBM gas), CPR by NSAI Interest / ope
Slide 59: Essar Energy – Refining
Essar Energy – Refining Increasing capacity and complexity Key highlights Capacity (MT) Low cost, safe and efficient operations – refinery operating 1 cost US$1-2 per barrel lower than global peers Current March 2011 36 2 Strategically located on the west coast of India 18 14 Increasing complexity f
Slide 60: Expansion at highly competitive capex
Expansion at highly competitive capex New grass roots refineries – capacity vs capex New refineries capex – country average 60,000 30,000 50,000 25,000 40,000 20,000 Capex ($/bpd) Capex ($/bpd) 30,000 15,000 World average: US$23,400/bpd 20,000 10,000 Essar Energy post phase 2 10,000 Essar Energy pos
Slide 61: Top quartile cost performer globally
Top quartile cost performer globally 4 3.65 3.5 3 2.5 2.25 Cost (US$/bbl) 2 1.5 1.33 1.15 1.06 1 0.70 0.74 0.64 0.45 0.39 0.39 0.5 0.30 0.31 0.31 0.26 0.20 0.15 0.19 0 Essar Energy Essar Energy Essar Energy Essar Energy Essar Energy Essar Energy Laggards Laggards Laggards Laggards Laggards Laggards
Slide 62: Competitive gross refining margin
Competitive gross refining margin Indian Complex Refinery Singapore Complex Margin 16.00 15.00 Average premium: US$5.23/bbl 14.00 11.60 12.20 GRM (US$/bbl) 12.00 10.30 US$ 7.34/bbl 10.00 8.00 7.66 6.60 6.00 6.48 6.11 4.00 5.79 3.49 2.00 - 2006 2007 2008 2009 2010 GRMs expected to improve with increa
Slide 63: Expansion to provide crude as well as product flexibility
Expansion to provide crude as well as product flexibility Ultra- Light Light heavy 11% 6% 20% Light 28% Heavy Crude mix Heavy 31% 25% Ultra- Ultra- heavy heavy 64% 63% Heavy 52% 14MT 18MT 36MT (current) (expected post phase 1 expansion) (expected post phase 2 expansion) Heavy end Light Heavy end Hea
Slide 64: Yield to shift to higher grade products
Yield to shift to higher grade products…optimal for export markets Conversion of entire negative margin fuel oil into high value added products and pet coke Building higher flexibility between light and middle distillates Flexibility to produce petrochemical feed stock Euro IV & V grade at 87% in Ga
Slide 65: Thank You
Thank You ENERGY