Essar’s $3.4 Billion Refinery in Wave of Indian Projects in Egypt

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Researched by Industrial Info Resources (Sugar Land, Texas). May has been a busy month for India’s Essar Global. The company has acquired steel companies in the US and Canada for a total investment of $3.2 billion, proposed a $590 million steel plant in Egypt and gone hunting for coal resources in Asia and Australia. With a week to run in the month it has added to its proposed projects in Egypt with a proposal for a $3.4 billion oil refinery in the north of the country.

Talks are said to be ongoing concerning the possibility of setting up the 300,000 barrels per day (bpd) refinery as a joint venture with selected foreign companies and the Egyptian government. Egypt currently has nine refineries which are mostly concentrated in the northeast near the cities of Cairo, Alexandria and Suez.

The refinery would be part of Essar’s strategy to create a larger presence in West Asia (if you are Asian, Chinese or Indian the ‘Middle East’ is now ‘West Asia’ – another outcome of globalization) as well as other global markets where oil fueled growth and a construction boom have boosted domestic consumption, squeezing supplies to Europe and Asia.

Egypt with major oil and gas reserves is an attractive destination for Indian interests giving a very positive return on investment as its reserves are developed to meet the demand for energy resources. The government is planning to take full economic advantage of the recent oilfield discoveries in the Gulf of Suez and the Western Sahara and has paused in its plans to privatize the 100,000 bpd Midor refinery in Alexandria. International companies are being encouraged to invest in Egypt’s oil and gas resources in order to reverse the downward trend of hydrocarbon output. In the 1990s, the country was producing about 1 million bpd of oil but currently the figure is down to about 800,000 bpd.

The family held Essar group (Kodambakkam, Chennai) is planning a number of projects in West Asia including a steel plant and a refinery in Iran. If the Egyptian refinery and its ownership structure is approved it is scheduled to be onstream in 2010. For related news items see May 16, 2007 – Middle Eastern Steel Production Expansion Backed by Japan and India and January 11, 2007 – India’s Essar $2 Billion Refinery Steps into Breach of Iranian Fuel Shortage.

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