Essar Shipping Limited. · NSE:ESSARSHPNG
Essar Shipping — Essar Oil — Investor Presentation (April 2011)
54 slides from Essar Shipping's investor presentation, April 2011
Slide 1: Essar Oil Limited Analyst Presentation
Essar Oil Limited Analyst Presentation April, 2011
Slide 2: Agenda of Presentation
Agenda of Presentation Performance Snapshot Industry Overview & Market Outlook Operations Projects Financials 1
Slide 3: Performance Snapshot
d ESSAR’ OIL & GAS Performance Snapshot
Slide 4: Highlights
Highlights Strong operating performance with record refinery throughput of 14.76 mmt Revenue & EBIDTA : Rs. 53,119 crore & Rs 2,780 crore, highest since inception. Current Price GRM for the Year increased to US$ 6.91/bbl as against US$3.70/bbl for previous year Refinery Expansion Projects are progre
Slide 5: Industry Overview & Market Outlook
Industry Overview & Market Outlook 4
Slide 6: Global Oil Demand
Global Oil Demand World Oil Demand (mmbpd) 90.00 89.35 89.00 87.81 88.00 87.00 86.31 86.06 86.00 84.75 84.97 85.00 84.00 83.00 82.00 81.00 80.00 2006 2007 2008 2009 2010 2011 2010 annual oil demand growth : 2.84 mmbpd (provisional), one of the highest in history 2011 oil demand growth is estimated t
Slide 7: Crack & Margin Outlook
Crack & Margin Outlook Cracks - Monthly Settled and Forward Cracks 25.00 20.00 15.00 10.00 5.00 0.00 Gasoil - Dubai Mogas92-Dubai Gasoil Crack is at $22/bbl vs lows of $6/bbl; Gasoline Crack is at $ 11.5/bbl vs lows of $2/bbl Average FY12 Forward Cracking Margin is higher than FY11 margin by nearly
Slide 8: Increasing Oil & Gas consumption
Increasing Oil & Gas consumption Low per capita oil consumption Low per capita gas consumption 10.5% 3.5% 13.5% 21.2 % 24.6% 21.9% Per capita gas consumption (annual 19.4 (annual barrels/person) - 2010 ‘000 cubic feet/person) - 2010 106.83 Per capita oil consumption 75.7 9.7 7.5 38.5 4.4 2.3 0.9 4.3
Slide 9: Operations
d ESSAR’ OIL & GAS Operations
Slide 10: Vadinar Refinery
d ny ae . . ESSAR Vadinar Refinery OIL & GAS
Slide 11: Operating Performance - Refinery
Operating Performance - Refinery Crude Throughput Crude Mix Ultra Heavy Heavy Light 16 14.76 13.50 100% 14 90% 19% 22% 21% 28% 12 80% Million Tonnes 10 70% 60% 45% 44% 8 51% 50% 46% 6 40% 3.60 3.65 30% 4 20% 36% 35% 2 26% 27% 10% - 0% Q4 FY10 Q4 FY11 FY10 FY11 Q4 FY10 Q4 FY11 FY10 FY11 Processed 14.
Slide 12: Operating Performance - Refinery Product Mix
Operating Performance - Refinery Product Mix Light Middle Heavy 100% 25% 29% 24% 28% 80% 60% 44% 50% 46% 46% 40% 20% 31% 25% 26% 26% 0% Q4 FY10 Q4 FY11 FY10 FY11 Optimised production of middle & light distillates – High margin segment Heavy Distillates include positive margin Bitumen converted from
Slide 13: Sales Break Up
Sales Break Up Sales Mix 100% Bulk PSUs Exports Retail 90% 80% 70% 7% 8% 2% 8% 5% 60% 9% 5% 6% 57% 60% 60% 57% 50% 40% 30% 20% 33% 32% 27% 25% 10% 0% Q4 FY10 Q4 FY11 FY10 FY11 Continue to focus on domestic market due to better price realization of petro products Export sales of Fuel Oil increased du
Slide 14: Retail Strategy
Retail Strategy First private company in India to enter petro retailing sector (2003) through a franchisee model (Capex investment by Dealers); flexible system to reap the benefit of opportunity available in market Number of Retail Outlets Operational & under construction has reached to 1635. Furthe
Slide 15: Projects
d ESSAR’ OIL & GAS Projects 14
Slide 16: Essar Oil – Refining
Essar Oil – Refining Increasing capacity and complexity Key highlights Low cost, safe and efficient operations – refinery operating Capacity (MMTPA) 1 cost US$1-2 per barrel lower than global peers 38 20 2 Strategically located on the west coast of India 18 14 Increasing complexity from 6.1 to 11.8
Slide 17: Refining Expansion - Phase I
Refining Expansion - Phase I Expansion to 18 MMTPA Delayed Coker Unit Complexity to improve to 11.8 from 6.1 Overall progress : 86.34% Engineering : 99.73 % Procurement : 91.27% Construction : 78.81% 100% purchase order done for long lead Items Planned shutdown in Sept/Oct, 2011 Tie – ins of new uni
Slide 18: Upgradation of existing unit – CDU/VDU
Upgradation of existing unit – CDU/VDU Overall Progress : 94% 116 out of 126 equipments received Erection of all equipments completed Revamp will be completed during the Shutdown – Q3 CY 2011 17
Slide 19: DCU (Delayed Coker Unit)
DCU (Delayed Coker Unit) Sept -10 March- 11 Overall Progress : 78% All Six Coker drums including structural modules erected. Major equipments erected : Debutanizer, Absorber, Stripper, Light cycle & Heavy cycle gas oil stripper, Blow down tower, Fuel gas scrubber, etc 231 out of 264 equipments recei
Slide 20: VGO HT (Vacuum Gas Oil Hydrotreater Unit)
VGO HT (Vacuum Gas Oil Hydrotreater Unit) Sept -10 March - 11 Overall Progress : 88.08 VGO-HT Both Reactors erected; Weighing Approx 1400 MT; 58.4 Meter long; Diameter 5.5 mtrs. 147 out of 177 equipments received. Both Reactors erected Major equipments erected : Kerosene & Diesel Stripper, MP Medium
Slide 21: ISOM Unit (Isomerization Unit)
ISOM Unit (Isomerization Unit); Pre-Commissioning started Sept -10 March -2011 Overall Progress : 91.32% Major equipments erected- Stabilizer, Net Gas Scrubber, LPG Stripper Deisohexanizer, Methanator Reactor, Feed surge drum & Atm. flash vessel 94 out of 101 equipments received Mechanical completio
Slide 22: DHDT Unit (Diesel Hydrotreater Unit)
DHDT Unit (Diesel Hydrotreater Unit) Overall Progress : 85.15% 89 equipments out of 122 equipments received including Reactors Major equipments erected : Recycle gas compressor, Recycle gas scrubber Stripper, Product fractionators, Feed surge drum, Recycle gas compressor Mechanical completion by Q3
Slide 23: HMU Unit (Hydrogen Manufacturing Unit)
HMU Unit (Hydrogen Manufacturing Unit) Unit Overall Progress : 80.13 63 equipments out of 74 equipments received Major equipments erected : Process condensate stripper, Process gas boiler, Pre reformer, Common LPG Surge drum, Flare knock out drum, Fuel gas knock out drum, HP condensate flash drum, S
Slide 24: Desalination Unit
Desalination Unit : 100% Erection Completed & Pipe Racks : 96% 23
Slide 25: Supporting Infrastructure Facilities
Supporting Infrastructure Facilities Facilities : Ports & Terminals (Owned by ESPLL) (1+1) Jetty/ berth for products offtake : 7 mmtpa + 7 mmtpa = 14 mmtpa 1 SPM with crude intake capacity : 27 mmtpa 24 24
Slide 26: Supporting Infrastructure Facilities
Supporting Infrastructure Facilities New Additional facilities 2 Road Gantries facilities completed 29 Tankages completed ( 1 million KL) Pipelines & other supporting infrastructure facilities completed 25
Slide 27: Supporting Infrastructure Facilities
Supporting Infrastructure Facilities Power Plants (Owned by Essar Power) Power Plant : 77 MW & steam @ 230 TPH Commercial operation of Vadinar Phase – I Expansion of 380 MW completed; Synchronized with Grid, ready to supply power to Refinery Expansion Project. 26
Slide 28: Cost-effective expansion and increased Complexity
Cost-effective effective expansion and increased Complexity Moving up on the Complexity Front Along with expansion at low cost … Cost Cost Cost (USD/complex bbl) Capacity Compl (US$ Cost (USD/compl Refineries (mmtpa) exity mn) (USD/bbl) exity/ bbl) Year 2435 2417 2313 EOL, Existing 14 6.1 2800 10370
Slide 29: Competitive gross refining margin
Competitive gross refining margin Indian Complex Refinery Singapore Complex Margin 16.00 15.00 Average premium: US$ 4.97/bbl 14.00 11.60 12.00 10.30 12.20 US$ 7.34/bbl 10.00 8.10 8.00 6.60 7.66 7.36 6.00 6.48 6.11 5.79 4.43 4.00 3.49 2.00 - 2006 2007 2008 2009 2010 Dec-10 Mar-11 28
Slide 30: Exploration and Production
Exploration and 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 2000 176 Developing as a leading CBM player - lower risk and with 2 significant demand and exciting growth profile
Slide 31: Leading CBM Gas Player in India
Leading CBM Gas Player in India Best estimate Unrisked in- 2P/ 2C prospective place Total Details of CBM Block Place Ownership Acreage resources Remarks resources resource Bcf Bcf Bcf Bcf Raniganj (CBM) West Bengal 100% 500 Sq km 201 792 - 993 CPR by NSAI (2010) Rajmahal (CBM) Jharkhand 100% 1128 sq
Slide 32: Project Progress at Raniganj
Project Progress at Raniganj 50 wells drilled 33 wells are put on production through dewatering Balance wells are under different stages of completion. completion Production level of 35000 scmd achieved Hydrofracturing of 23 wells with 139 jobs completed. completed Significant progress achieved in d
Slide 33: Financials
d ESSAR’ OIL & GAS Financials 32
Slide 34: Refining and Marketing Financials
Refining and Marketing Financials Unaudited & Provisional Rs - crore R&M Revenue R&M EBITDA Throughput 107.3 CP GRM1 98.4 3.70 6.91 (mm bbls) US$/bbl 60,000 53,119 3,000 2,780 +25% +43% 50,000 2,500 42,402 Rs - Crore 1,938 Rs - Crore 40,000 2,000 30,000 1,500 20,000 1,000 500 10,000 - - FY 2010 FY 2
Slide 35: Refining and Marketing Financials
Refining and Marketing Financials Unaudited & Provisional Profit Before Tax Profit After Tax 900 835 700 654 800 600 700 500 Rs - Crore 600 Rs - Crore 2817% 2117% 500 400 400 300 300 200 200 29 100 100 29 - - FY 2010 FY 2011 FY 2010 FY 2011 Net Profit increases due to higher Refinery Margin Profit b
Slide 36: Net worth & Market Capitalisation
Net worth & Market Capitalisation Rs - crore Rs - crore Net worth Market Capitalisation 7,000 19,500 6,538 19,125 40% 19,000 6,000 18,500 5,000 4,674 15% 18,000 4,000 17,500 16,605 3,000 17,000 16,500 2,000 16,000 1,000 15,500 - 15,000 FY 2010 FY 2011 8 April, 2010 8 April, 2011 Net worth increased
Slide 37: Financial Highlights
Financial Highlights Unaudited & Provisional Rs in Crore Full Year ended March FY 2010 FY 2011 % change Revenue (Gross) 42,402 53,119 25% EBITDA 1,938 2,780 43% Profit Before Tax 29 835 2817% Profit After Tax 29 654 2117% Cash Profit 757 1,566 107% Property, Plant and Equipment 16,628 20,197 21% Deb
Slide 38: Financial Highlights
Financial Highlights Unaudited & Provisional Rs in Crore Full Year ended March FY 2010 FY 2011 % change Refinery, Marketing & Corporate 1,930 2,773 44% EBITDA E&P EBITDA 7 7 -3% Depreciation 728 731 0% Net finance costs 1,095 1,073 -2% Profit Before Tax 29 835 2817% Tax (1) 181 - Profit After Tax 29
Slide 39: GRM Benchmarking
GRM Benchmarking Current Price GRM ($/bbl) $9.00 EOL's CP GRM Singapore Cracking Margin $8.15 $8.00 $7.21 $7.00 $6.49 $7.36 $6.00 $5.79 $5.37 $5.00 $5.46 $4.24 $4.23 $4.92 $4.00 $3.00 $3.69 $3.14 $1.89 $2.00 $1.56 $1.00 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4FY11 38 38
Slide 40: Financial Results
Financial Results ( Rs Crore ) Unaudited & Provisional Particulars Q4 FY10 Q4 FY11 FY 10 FY 11 Throughput-Million Tones 3.60 3.65 13.50 14.76 INCOME Income from Operation 11,942 14,846 42,402 53,119 Less: Excise Duty & Taxes 1,488 1,531 5,897 6,131 Net Income from Operation 10,454 13,315 36,505 46,9
Slide 41: Summary
Summary Strong Financial & Operating Performance Refinery Expansion closure to completion Clear strategy in place for sourcing of crude as well as product evacuation Demand environment for petro products remains positive Raniganj commercialisation to provide boost to E&P strategy Capturing further g
Slide 42: Appendix
d ESSAR’ OIL & GAS Appendix 41
Slide 43: Indian Growth Story to continue
Indian Growth Story to continue……. India has low GDP per capita ... ... is expected to drive among the fastest GDP growth rates in the world 2.8% 1.2% 4.0% 7.7% 10.3% 8.8% GDP per capita (PPP terms) – 46,085 9.75% 8.25% GDP Growth Rate 34,919 2010 (US$) (2010-15) 4.33% 4.09% 15,671 11,118 2.56% 2.46
Slide 44: Outlook
Outlook ECONOMIC US economy seen recovering and unemployment has been coming down China continues to grow Europe is stabilizing Emerging markets and Latin America markets are seeing sustained oil demand growth Japan earthquake/tsunami is expected to have stronger impact on oil demand due to increase
Slide 45: Major Units and Licensors
Major Units and Licensors CAPACITY CAPACITY LICENCER / DETAILED UNIT / FACILITY (MMTPA) Post OPTIMISATION TECHNOLOGY ENGG 10.5 (CDU) 18 (CDU) CDU / VDU 7.2 (VDU) 10.9 (VDU) VISBREAKER (VBU) 1.9 2.0 (CDU) NAPHTHA HYDROTREATER (NHT) 1.6 1.8 CONTINUOUS CATALYTIC REFORMER UNIT 0.9 1.1 (CCR) FLUID CATALY
Slide 46: Expansion to provide crude as well as product flexibility
Expansion to provide crude as well as product flexibility Light Light Ultra- Light 11% 13% heavy 20% 28% Crude mix Heavy 25% Ultra- Heavy Ultra- Heavy 64% Heavy 52% 87% 14MT 18MT 20MT (current) (expected post phase 1 expansion) (expected post optimisation) Fuel loss Fuel loss 6% Fuel loss Light Heav
Slide 47: Yield to shift to higher grade products optimal for export markets
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 55% in Ga
Slide 48: 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 Peak 2P/ 2C resources Opex Comments resources Prodn. Assets Ownership Oil Gas Total Oil Gas Total (US$ mn) mmbbl Bcf mmboe mmbbl Bcf mmboe $0.43/ Test production commenced. Raniganj (CBM) 100% 201 33 - 792 132
Slide 49: Raniganj Production Profile
RG(EAST)-CBM-2001/1 2001/1 (RANIGANJ) PRODUCTION PROFILE MMSCMD 4.000 3.500 3.000 2.500 2.000 1.500 1.000 0.500 0.000 1-Sep-13 13 1-Sep-18 18 1-Sep-23 23 1-Sep-28 28 1-Sep-33 33 1-Sep-38 38 1-Jul-09 09 1-Mar-11 11 1-Jul-14 14 1-Mar-16 16 1-Jul-19 19 1-Mar-21 21 1-Jul-24 24 1-Mar-26 26 1-Jul-29 29 1-
Slide 50: Raniganj – low risk development to serve customers in Eastern India
Raniganj – low risk development to serve customers in Eastern India’s gas deficit industrial belt Field overview Onshore block, located in Damodar Valley coal field in the Raniganj region of West Bengal Resources 993bcf (165mmboe) of 2C and best estimate prospective resources (CBM gas), CPR by NSAI
Slide 51: Work Program for New CBM IV Block
Work Program for New CBM IV Block Block Name Rajmahal Talchir IB Valley Sohagpur (NE) Phase I (2 Years) 1. 30 core holes 1. 30 core holes 1. 25 core holes 1. 25 core holes 2. 3 test wells 2. 3 test wells 2. 3 test wells 2. 3 test wells Cost (Million US$) 7.95 7.95 6.95 6.95 EXIT OPTION Phase 2 (3 Ye
Slide 52: Work Progress- Oil and Gas
Work Progress- Oil and Gas Block Status AA-ONN-2004/3 •Environment Environment Impact Assessment studies for drilling has been taken up Assam and Draft EIA report submitted. •3 3 D seismic data acquisition and processing job has been taken up for finalizing drilling locations. AA-ONN-2004/5 •Environ
Slide 53: OPL 226 – Nigeria
OPL 226 – Nigeria 340000 m 5o 40’ 380000 m 6o 00’ 420000 m Located in Proven Nigerian Petroliferous Basin TEXACO – OML 85 Ato N -1 Hobobo-1 OPL SHELL– OML 77 Block is covered by 698 sq km of 3D seismic & Shale Diapir Songhai -1 471 ADDAX– OPL 225 six wells were drilled by earlier operator, all 0m At
Slide 54: Thank you
d ESSAR’ OIL & GAS Thank you 53