Essar Oil Limited

A l t P t tiAnalyst PresentationJuly 27, 2010

Essar Oil LimitedEssar Oil Limited

A world-class, low cost Indian integrated energy company

Refining Exploration & Production Marketing

High impact E&P platformLow cost refining complex centred around

Vadinar supersitePan India Presence through Retail Network

1

Capitalise on India’s rapidly growing energy demand

Essar Oil - E&P HighlightsEssar Oil - E&P Highlights

1 Rajmahal block awarded by MoPNG. 3 more blocks from CBM-IV round with in-place resource of 733mmboe also awarded to EOL, execution of contracts expected shortly

Total Reserve Portfolio increased to 2132 mmboe from 1400 mmboe

Gas production from 15 test wells drilled under Phase I being ramped up with progressive dewatering3

2

Gas production from 15 test wells drilled under Phase – I, being ramped up with progressive dewatering

4

3

Test production of gas from Raniganj to commence by Q2 FY2011 & Commercial Production to start by Q3 FY 2011

Drilling activities for Raniganj (phase – II ) commenced with 8 pilot wells & 36 surface holes drilled5

FY 2011

Development Plan envisaging drilling of 500 wells submitted to DGH, under review6

Term Loan of Rs. 575 crore tied up with Bank for phase – I of Raniganj Project7

Essar Oil – Refining Operation, Expansion Project & Retail Business HighlightsRetail Business Highlights

1 Achieved highest throughput of 3.68 MMTPA for Q1 FY2011 against 2.76 MMTPA for Q1FY 2010

2

Achieved highest throughput of 3.68 MMTPA for Q1 FY2011 against 2.76 MMTPA for Q1FY 2010

76% of products slate comprises light & middle distillates & processed 66 % of Heavy or Ultra Heavy crude

3 Supply of Mangala Crude from Cairn India begun with 25000 bpd through heated pipeline at Refinery

4 Refinery Expansion Phase I to increase capacity to 18 mmtpa largely on track, scheduled to start the commercial production on time - Overall progress of 62%

5 Supporting Infrastructures including the pipeline completed to avail the Natural Gas at Refinery Project Site

Deregulation of Motor Spirit price by the Govt of India to provide level playing field6

7 Strategy to increase the Retail outlets to 1700 by March, 2011 to increase retail sales & profitability

C l t d A t ith GAIL f tti CNG tl t ll I di B i t t il tl t8 Completed Agreement with GAIL gas for setting up CNG outlets on all India Basis at our retail outlets

Essar Oil – Financial Highlights ( Q1 FY 2010 – 11)Essar Oil Financial Highlights ( Q1 FY 2010 11)

1 G R f R 12048 D ti & E t R ti 70% & 30%

EBIDTA Rs. 407 crores against Rs 665 crore in corresponding quarter ended June -092

1 Gross Revenue of Rs. 12048 crore; Domestic & Export Ratio : 70% & 30%

EBIDTA Rs. 407 crores against Rs 665 crore in corresponding quarter ended June 092

3 GRM 5.61 $/ bbl as against $ 6.74/bbl for corresponding quarter ended June -09

Essar Energy plc, holding company of Essar’s refinery, E&P and power businesses listed at London Stock Exchange, raised USD 1.95 billion

3

4 Essar Energy Plc infused USD 225 million of Equity and USD 262 million through FCCBs in Essar Oil

5 Funds to be used for Refinery Phase – I Expansion, E&P activities and other corporate purpose

6 Essar Energy Plc included in FTSE – 100 within one month of its listing

Essar Energy London ListingEssar Energy London Listing

5

Essar Energy London ListingEssar Energy London Listing

6

Essar Energy London ListingEssar Energy London Listing

7

Essar Energy London ListingEssar Energy London Listing

8

Industry TrendsIndustry Trends

Gasoil FO Jet Gasoline

Cracks on Products

88

Global Oil Demand

$7.03 $11.33 $7.42 $7.28 $7.33

$9.37 $11.74

$7.00 $9.81 $10

$15 87.44

86.2885.83

85.33 85 28

85.88 86.0785.82

86.987.2

86

87

88

$6.98 $6.22 $8.94

$(3.01)

$7.13

$2.86

$7.37

$-

$5 85.33

84.4784.1

85.28

84

85

$(5.84)$(3.01)

$(4.52)$(6.69)

$(10)

$(5)

April - Jun, 09 Jul - Sept, 09 Oct - Dec,09 Jan - Mar,10 April - Jun,10

82

83

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Source :IEA

3.103.00

3.50

16.0 MS (% growth) HSD (% Growth)

April Jun, 09 Jul Sept, 09 Oct Dec,09 Jan Mar,10 April Jun,10

Petro Product Growth in IndiaArab Light & Arab Heavy Difference

1.701.55

1.951.60

1.50

1.95

1 70

1.751.50

2.05

2.80

1.50

2.00

2.50

7.4

11.3

9.0

13.9

11.19.0

8 0

10.0

12.0

14.0

1.50

1.201.70 1.50

0 00

0.50

1.00

1.50

4.54.8

6.9 6.78.4

2.0

4.0

6.0

8.0

9

0.00 1.40.0

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10Source :PPAC

CEO’s MessageCEO s Message

• Petroleum Products demand in India continue to demonstrate strong growthPetroleum Products demand in India continue to demonstrate strong growth

supported by growth in Indian economy, increase in per capita income, growth in

hi l d G t f i f t t divehicles and Govt. focus on infrastructure spending

• India will remain the anchor market for Essar’s expanded refinery capacity

• Deregulation of Gasoline price with a clear roadmap for freeing up of Gasoil price, will

create healthy competition among players and benefit the consumers

• Essar will continue to expand its retail network to realise the deregulated market

opportunities.

• Focus on E&P business to transform the image of company from being a pure refiner

to an integrated Oil & Gas player.g p y

• Refinery Phase – I Expansion, focus on Indian Retail Marketing & E&P business will

deliver the growth & value for our stakeholders.

10

deliver the growth & value for our stakeholders.

Exploration & ProductionExploration & Production

11

Essar Oil – Exploration & ProductionEssar Oil – Exploration & Production

Key highlights High impact E&P platform

40176

2500

Oil Gas

Reserves & resources (mmboe)(a)

1 Diverse portfolio of offshore and onshore oil & gas blocks971 2132

931

1762000 Developing as a leading CBM player - lower risk and with

significant demand and exciting growth profile2

Attractive economics for onshore CBM resources versus offshore 3

49

1500

Raniganj –2C and best estimate prospective resources: 993bcf CSG; commercial production by end 2010; gross peak production: 4

Attractive economics for onshore C M resources versus offshoregas in India - favourable fiscal terms and lower opex and capex

3

1012

963

19571000

5

3.5mmscm/d

Rajmahal – Best estimate prospective resources: 4.7tcf (CBM)

87

500

6 Sohagpur, Talcher & IB valley CBM blocks- 4.4 tcf inplace resources as per DGH estimates150

630

2P & 2C Contingent Resources

Best Estimate Prospective Resources

Unrisked / Inplace

Resouces

Total Resources

Total investment to date c.US$160mm

International and other domestic – Unrisked/in-place resources of over 238 mmboe

7

$

(a) Subject to necessary approvals. Please refer to next slide for further details

Source: Company information, ARI, RPS Energy, NSAI

12

A high impact Indian-led E&P platformA high impact, Indian-led E&P platform

Mehsana(a) Rajmahal(b) Vietnam(e)

70% interest (ESU)2P reserves: 2mmbbl (oil)Potentially significant CBM play

100% interest in CBM blockBest estimate prospective resources: 4.7tcf CBM gas (787mmboe)

100% interest in block 114Unrisked/undiscovered in-place resources: 1.0tcf gas (167mmboe)

Nigeria(c)(e)

CPR by ARI (2010)

100% interest in offshore block OPL 226 – in discussion with local partner to farm down to 63%2C and best estimate

O h ASP(NE)-CBM-2008/IV(b)

Ratna /R Series(d)

prospective resources (based on 63% interest): 126mmboe (f)

(48% oil) CPR by NSAI (2010)

Other Assets

Assam (e) (100% interest): Unrisked/undiscovered in-place resources: 10mmboe (oil)

Mumbai Offshore (e) (50% interest): U i k d/ di d i l

( )

100% interest in block

TL-CBM-2008/IV(b)

IB-CBM-2008/IV(b)

50% interest2C resources: 81mmboe (92% oil, 8% gas)Commercial production: Q4 CY2013(d)

d k

Raniganj(c)

100% interest2C and best estimate

Unrisked/undiscovered in-place resources: 186bcf (31mmboe)

Indonesia (e) (49.5% interest): Unrisked/undiscovered in-place resources: 30mmbl (oil)

( )

100% interest in these 2 blocks

Expected gross peak production: 35kbbl/d

prospective resources: 993bcf CBM gas (165mmboe)Trial production: Q2 CY2010Expected gross peak production: 3.5mmscm/d (g)

CPR by NSAI (2010)2P reserves/ 2C and prospective resources

Madagascar(e)

Australia(e)

SP(NE)-CBM-2008/IV, TL-CBM-2008/IV, IB-CBM-2008/IV(b)

Note: Reserves and resources data is working interest, adjusted to reflect Essar Oil’s interest(a) Signed PSC for Oil; CBM rights subject to government approval and modification in government policy(b) Awarded by GOI under CBM IV round (c) Signed PSC

13

Unrisked Rresources

2P reserves/ 2C and prospective resources (d) PSC expected to be signed shortly, which is subject to a government approval process(e) Subject to necessary approval for transfer to Essar Oil(f) c.22mmboe (2C) of gas classified as development not viable(g) Relates to 2C and best estimate prospective resourcesSource: Company information

Details of Major E&P blocks with reserves and resource estimatesestimates

2P/ 2CBest estimate prospective

C C t

Assets Ownership

2P/ 2C resourcesp p

resourcesCapex Comments

Oil Gas Total Oil Gas Total (US$ mn) Opex Peak Prodn.

mmbbl Bcf mmboe mmbbl Bcf mmboemmbbl Bcf mmboe mmbbl Bcf mmboe

Raniganj (CBM) 100% - 201 33-

792 132 439$0.43/ mmbtu

3.5 mmscm/dTest production commenced.

Moving to commercial developmentp

Rajmahal (CBM) 100% -- - -

4,723 787 4Large acreage. Situated in rich

coal belt

Potentially significantMehsana 70% (b) 2 - 2 - - - 4 - -

Potentially significantCBM play

Ratna/ R-Series 50% (a) 74 40 81-

- 568 $5.3/bbl 35k bbl/dDiscovered fields.

Development to commence post signing of PSC

Nigeria 63% (c) 11 136 33 49 264 93 16Located in proven Nigerian

petroliferous basin

Total 87 377 149 49 5779 1012

(a) For Ratna / R-Series, balance 50% is held by ONGC (40%) and Premier Oil (10%)

(b) For Mehsana (ESU oil field) balance 30% ownership is held by ONGC

14

(b) For Mehsana (ESU oil field), balance 30% ownership is held by ONGC

(c) In discussion with local partner to farm down to 63%

CBM Projects – location & resources

JAMMU AND KASHMIRJAM M U AN D K ASH M IRRajmahal CBM Block

CBM Projects location & resources

CHANDIGARH

Intern

ation

al Bord

er

PUNJAB

SRINAGAR

SHIMLA

Pithoragarh

UTTARANCHALDEHRADUN

Uttarkashi

HaridwarAlmora

C H A N D IG A R H

Intern

ationa

l Bor

der

PU N JAB

S R IN A G A R

S H IM L A

P itho ragarh

U TTAR AN C H ALD E H R A D U N

U ttarkash i

H a ridw arA lm o ra

DELHIGurgaon

In

Jaisalmer

Udaipur

Amla

RAJASTHANJodhpur

Nagaur

Bikaner

JAIPUR

HARYANA

Banda

GUNA (VIJAIPUR)

Kanpur

Naini Tal

LUCKNOW

Pithoragarh

UTTAR PRADESH

Shanjahenpur

Faridabad

Almora

International Border

Jagdishpur

GayaBIHAR

PATNA

Madhubani

Maharajganj Darjiling

GANGTOK

ARUNACHAL PRADESH

MANIPUR

URA

IMPHAL

ITANAGAR

SHILLONG

DISPUR

MEGHALAYANAGALA

ND

KOHIMA

ASSAM

D E LH IG urgaon

In

Ja isa lm er

U da ipur

A m la

R AJASTH ANJodhpur

N agaur

B ikan er

JA IP U R

H ARYAN A

B anda

G U N A (V IJA IP U R )

K anpur

N ain i T a l

L U C K N O W

P itho ragarh

U TTAR PR AD ESH

S hanjahenpur

F aridabad

A lm o ra

International Border

Jagdishpur

G ayaB IH AR

P A T N A

M adhuban i

M ahara jgan j D a rjiling

G A N G T O K

AR U N AC H AL PR AD ESH

M AN IPU R

URA

IM P H A L

ITA N A G A R

SH ILLO NG

D IS P U R

M E G H ALAYANAGALA

ND

K O H IM A

ASSAM

MAHARASHTRA

Hoshangabad

NashikSILVASSA

GUJARATRajkot

KndlaMundra

JAMNAGAR

BhujGK ON90/2

HAZIRA (HBJ INTERCONNECT)

Vadodara

AHMEDABAD

Dungarpur

Kheda

Bhavnagar

Godhra

GANDHINAGAR

CB ON1Udaipur

Palanpur

UjjainDevas

DharJhabua INDORE

Ratlam

Mandsaur

WARDHA Kendrapara

GarhchiroliChandrapur

Yavatmal

Adilabad

BHUBANESHWAR

BhawanipatnaKhurda

CUTTACK PARADEEPPuri

CHHATISGARH

JabalpurMADHYA PRADESH

Damoh

Betul

Nagpur

(HBJ INTERCONNECT)GUNA (VIJAIPUR)

BHOPAL

Bina

RAIPUR

Bilaspur

Rewa

Bokaro

WEST BENGAL

JHARKHANDAmbikapur

SambalpurORISSA

BIHAR

RANCHI

Jamshedpur

Medinipur

Baleshwar

Baripada

KOLKOTA

DhanbadAGARTALA

TRIP

UR

MIZ

OR

AM

AIZWAL

M AH AR ASH TR A

H oshangabad

N ash ikS IL V A SS A

G U JARATR a jkot

K nd laM undra

JA M N A G A R

B h ujG K O N 90 /2

H A ZIR A (H B J IN T E R C O N N E C T)

V a d od ara

A H M E D A B A D

D unga rpur

K h e da

B havnagar

G odhra

G A N D H IN A G A R

C B O N 1U da ipur

P alanpur

U jja inD evas

D harJhabua IN D O R E

R a tlam

M andsaur

W A R D H A K endrapa ra

G arhch iro liC handrapur

Y ava tm a l

A d ilabad

B H U B A N E S H W AR

B haw an ipatnaK hurda

C U TT A C K P A R A D E E PP uri

C H H ATISG AR H

Jaba lpurM AD H Y A PRAD ESH

D am oh

B e tu l

N agpur

(H B J IN TE R C O N NE C T)G U N A (V IJA IP U R )

B H O P A L

B ina

R A IP U R

B ilaspu r

R ew a

B okaro

W EST B EN G AL

JH ARK H AN DA m b ikapu r

S am ba lpurO R ISSA

B IH AR

R A N C H I

Jam shedpur

M ed in ipur

B aleshw ar

B aripada

K O L KO T A

D hanbadA G A R TA LA

TRIP

UR

MIZ

OR

AM

A IZ W A L

Raniganj CBM Block

Anantapur

Bellary

Zahirabad

Raichur

GOA

Karwar KARNATAKA

KOLHAPUR

Pune

RatnagiriDABHOL

Kudal

TROMBAYURAN

Alibag

Thane

Osmanbad

Sangli

GokakBijapur

Bid

KAKINADARajahmundry

ANDHRA PRADESH Ongole

Guntur

Khammam

KondapalleVIJAYAWADA

Kurnool

Mahbubnagar

HYDERABAD

DundigalBidar

Nizamabad

Adilabad

Eluru Yanam

Uppada

Vizianagaram

VISHAKHAPATNAM

A nan tapu r

B e lla ry

Z ah irabad

R a ichur

G O A

K arw ar KAR N ATAKA

K O L H A P U R

P u ne

R a tnag iriD A B H O L

K udal

T R O M B A YU R A N

A liba g

T ha ne

O sm anbad

S angli

G okakB ijapur

B id

K A K IN A D AR a jahm undry

AN D H R A PRAD ESH O ngo le

G un tur

K ham m am

K o nd a pa lleV IJA Y A W A D A

K urnoo l

M ahbubnagar

H Y D E R A B A D

D und iga lB ida r

N izam abad

A d ilabad

E lu ru Y anam

U ppada

V iz ia nagaram

V IS H A K H A P A TN A M

Sohagpur CBM BlockTalchir CBM Block

Coimbatore

Udhagamandalam

p

KE

RALA

Ernakulam

KK08

SURATHKAL Hassan

MadikeriMangaloreKasargod

NagapattinamThanjavur

Nellore

Kanchipuram

Cuddalore

ENNOREKolar

TiruchirappalliTAMILNADU

BANGALORE

PONDICHERRYVillupuram

Vellore

Chittoor

C o im batore

U dh agam anda lam

p

KE

RALA

E rnaku lam

K K 08

S U R A T H K A L H assan

M ad ikeriM anga loreK asa rgod

N agapa ttinamThanjavur

N ello re

K anch ipuram

C udda lo re

E N N O R EK o lar

T iruch irappa lliTAM ILN AD U

B A N G A LO R E

PO N D IC H E RR YV illupu ram

V e llore

C hittoor

IB Valley CBM Block

15

AlappuzhaKAYANKULAM

Kollam

Ramanathapuram

TUTICORINTiruneveli

A la pp u zhaK A Y A N K U LA M

K ollam

R am ana thapuram

T U T IC O R INT iruneve li

Emerging as a significant player in CBM segment in the country

15

15Emerging as a significant player in CBM segment in the country

Leading CBM gas player in IndiaLeading CBM gas player in India

Details of CBM Block Place Ownership Acreage2P/ 2C

resources

Best estimate prospective

Unrisked in-place resource

TotalRemarksDetails of CBM Block Place Ownership Acreage resources

resourcesplace resource Remarks

Bcf Bcf Bcf Bcf

Raniganj Calcutta 100% 500 Sq km 201 792 - 993 CPR by NSAI (2010)

R j h l Jh kh d 100% 1128 k 4 723 4 723 CPR b ARI (2010)Rajmahal Jharkhand 100% 1128 sq. km - 4,723 - 4,723 CPR by ARI (2010)

SohagpurM.P. &

Chhattisgarh100% 339 sq. km 600 600 As per DGH

Talche Orissa 100% 557 sq. km 2,600 2,600 As per DGH

500 sq. km

q p

IB Valley Orissa 100% 209 sq. km - - 1,200 1,200 As per DGH

Total 2733 sq km 201 5,515 4,400 10,116

Leading CBM player in the country with 2733 sq km of acreage & more than 10 TCF of reserve

and resources in place under five blocks.

Presence in major key market having deficit of unconventional gases

Experience Team of 100 engineers & technical staffs with avg. experience of more than 8 years

in the field of execution & operation of CBM project.

Deployment of innovative industry standard technologies for drilling & production from CBM Wells

16

Essar owns a versatile fleet of oil well rigs, core hole rings, air drilling rigs & other critical equipment

Raniganj – low risk development to serve customers in Eastern India’s gas deficit industrial beltEastern India s gas deficit industrial belt

Field overview

Resources

Onshore block, located in Damodar Valley coal field in the Raniganj region of West Bengal

Resources993bcf (165mmboe) of 2C and best estimate prospective resources (CBM gas), CPR by NSAI (2010)

Interest /operator

100% interest, Essar Oil is operator

Current status17 information wells 15 test wells drilled; gas flow startedAwaiting approval of development plan

Key milestones500 wells to be drilled over the life of the assetTrial production sales planned for Q2 FY2010Key milestones Trial production sales planned for Q2 FY2010Commercial production expected by December 2010

Government take and pricing

Royalty at the rate of 10% of well-head price is payable to the government of West Bengal. Production level payments (PLP) linked to a percentage of revenue are

Production profile

4.0

and pricing also payable to the Government of India, based on a formula

Capex to full d l t

Capex to full development: c.US$439mn– to be funded 70/30 debt/equity

1 5

2.0

2.5

3.0

3.5

n (m

msc

m/d

)

development – capex figure reflects estimated expenditure for both 2C and prospective resources

Opex guidance US$0.43/mmbtu

Capex guidance and CY 2010 : c US$97mn (net share)

0.0

0.5

1.0

1.5

09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42

Pro

duct

ion Capex guidance and

phasingCY 2010 : c.US$97mn (net share)CY 2011 : c.US$131mn (net share)

Other Cost/well: US$0.63mn

Evacuation Pipeline being built (48 KM)

17

Source: Company information, NSAINote: FY ended March 31st. Production profile reflects both 2C and best estimate prospective resources

FY0

FY1

FY1

FY1

FY1

FY1

FY1

FY1

FY1

FY1

FY1

FY2

FY2

FY2

FY2

FY2

FY2

FY2

FY2

FY2

FY2

FY3

FY3

FY3

FY3

FY3

FY3

FY3

FY3

FY3

FY3

FY4

FY4

FY4 Evacuation Pipeline being built (48 KM)

Customers Philips Carbon, Matix Fertilizers already signed up

Pictorial progressPictorial progress… Raniganj… Raniganj (From Well to Market)(From Well to Market)Pictorial progressPictorial progress… Raniganj … Raniganj (From Well to Market)(From Well to Market)

Air Drilling Rig For CBMAir Drilling Rig For CBM PC Pumps running at test wellsPC Pumps running at test wells Separators installed at test wellsSeparators installed at test wells

Pipe line ConstructionPipe line Construction Plantation at test well sitePlantation at test well site Gas flareGas flare

18

Refining & MarketingRefining & Marketing

19

Operational Performancep

Crude Throughput Crude Mix

120%13.50

12

14

25% 22% 28%19%

100%

120%

Ultra Heavy Heavy Light

6

8

10

52% 51%46%

47%

28%

60%

80%

2.76 3.60 3.68

2

4

6

24% 27% 26%34%

20%

40%

-QE0609 Full Year-10 QE0310 QE0610

0%

QE0609 Full Year-10 QE0310 QE0610

Processed more than 20 types of crudesProcessed 3.68 Million ton of crude, highest Processed more than 20 types of crudes

during the Quarter including ultra heavy &

tough crudes like Ras Gharib, Merey etc.

throughput for any quarter as against 2.76

million ton in corresponding previous quarter

Avg. API (Density) – 32.4 , Avg. Sulphur % –

1.70 and Avg. TAN – 0.30

( due to shut down)

Continuous to optimise the capacity utilization

ith li d it tili ti th

20

Beginning the processing of Mangla crudewith annualized capacity utilization more than

14 mmtpa)

Operational Performancep

Sales MixProduct Slate

23% 24% 25% 28%

100%

Light Middle Heavy

52% 49% 44%

24% 25% 28%

60%

80%

31%

52% 49% 44%46%

20%

40%

26% 27% 31% 26%

0%

QE0609 FY 2010 QE0310 QE0610

Optimised production of middle & light distillates – High margin segment

Continue to focus on domestic market due to

better price realization of petro products

Heavy Distillates includes positive margin Bitumen converted from low margin FO.

Captured 14% share of bitumen market in India

Reduction in retail sales due to increase in petro

21

Reduction in retail sales due to increase in petro

product prices in international market

Retail Marketing : Pan India Presence with Flexiblebusiness modelbusiness model

1First private company in India to enter petro retailing sector (2003) through a franchisee model

( Capex investment by Dealers)

Deregulation of MS prices by GOI to provide level playing field, expecting freeing up of HSD prices shortly

Expansion of Retail outlets to 1700 by March 2011 from existing 1344 Retail outlets3

2

Expansion of Retail outlets to 1700 by March, 2011 from existing 1344 Retail outlets.

4

3

Existing Indian PSUs sales per retail outlet per month : 153 KL ( MS : 37 KL and HSD : 116 KL)

Avg. sales of Petro Products at our Retail outlet to increase to 100 KL perm month per outlet from existing 40KL subject to deregulation of HSD prices by GOI

5

g p p ( )

Focus on Gujarat & Western India Market due to Sales Tax benefit & logistic advantage6

Focus on Non Fuel Retail services like Lubricants, Batteries, Ticket Booking, ATM, Food Parlor, Agro Productsetc to generate additional revenue stream for both the Company & the franchisee

7

Refinery ExpansionRefinery Expansion

23

Essar Energy – Refiningssa e gy e g

Key highlights Increasing capacity and complexity

1 Low cost, safe and efficient operations – refinery operating cost US$1-2 per barrel lower than global peers

Capacity (MT)Current March 2011

36

Strategically located on the west coast of India2

1418

Crude slate geared towards heavy crudes (89% of crude mix

Increasing complexity from 6.1 to 11.8 following Phase 1, enhancing crude and product flexibility

3

T t l l tiToday

Post Phase I

Post Phase II

Vadinar currently one of India’s largest refineries: will be 5

Crude slate geared towards heavy crudes (89% of crude mix comprises of heavy and ultra-heavy crude) post phase - I

4Total cumulative capex( US$2.7bn US$4.4bn US$9.15bn

Total incrementalcapex – US$1.7bn US$4.75bn

y gamongst the top 5 globally at 750k bbl/d post Phase 2

5

Timing for Phase 2 to be determined based on a review of k di i d i f fi i l l

6

Complexity: 6.1 11.8 12.8

API (density) avg.: 31.3 24.8 24.0

Sulphur % avg.: 1.6% 3.0% 3.0%

Expansion at competitive capex cost; cost/complexity/bbl of $1011 and $962 post Phase I & Phase II respectively

7

market conditions and attainment of financial closure6

Product grade: Euro III/IV Euro IV/V Euro V/ US Spec/

CARB

24

Expansion at highly competitive capexpa s o at g y co pet t e cape

New grass roots refineries – capacity vs capex New refineries capex – country average

60,000 30,000

40 000

50,000

20 000

25,000

30,000

40,000

$/bp

d)

15,000

20,000

$/bp

d)

20,000

Cap

ex ($

World average: US$23,400/bpd

10,000

Cap

ex ($

10,000

Essar Energy currentEssar Energy post phase 1

Essar Energy post phase 2

5,000

00 100 200 300 400 500 600 700 800

0World

averageChina Saudi

ArabiaIndia Essar

Energy current

Essar Energy

post

Essar Energy

post

25

Note: The timing for Phase 2 will be finished based on a review of market condition and attainment of financial closureSource: KBC, Company information

Capacity (kbp/d)current post

phase Ipost

phase II

Top quartile cost performer globallyTop quartile cost performer globally

43.65

3

3.5

2.25

2

2.5

(US

$/bb

l)

1.331.15 1.06

0 741

1.5

Cos

t (

0.70

0.30

0.64

0.15

0.74

0.450.31 0.39 0.39

0.26 0.310.20 0.19

0

0.5

Lagg

ards

Aver

age

Essa

r Ene

rgy

Lagg

ards

Aver

age

Essa

r Ene

rgy

Lagg

ards

Aver

age

Essa

r Ene

rgy

Lagg

ards

Aver

age

Essa

r Ene

rgy

Lagg

ards

Essa

r Ene

rgy

Aver

age

Lagg

ards

Aver

age

Essa

r Ene

rgy

Total costs (US$/bbl) Manpower costs (US$/bbl)

Operations variable costs (US$/bbl)

Asset management costs (US$/bbl)

Purchased energy costs (US$/bbl)

Other overhead costs(a) (US$/bbl)

(a) In addition to the above refinery operating costs, additional costs of US$0.96/bbl were incurred for product handling charges and other corporate and marketing expenses during FY09Note: Categorisation of average and Laggard refineries as per KBC analysis Laggards representative of fourth quartile performance Essar Energy costs relate to 2009/10 operational costs as estimated by KBC

26

Note: Categorisation of average and Laggard refineries as per KBC analysis. Laggards representative of fourth quartile performance. Essar Energy costs relate to 2009/10 operational costs as estimated by KBC. Asset management costs comprise costs of shutdown, turnaround, equipment maintenance and repair, and other routine maintenance. Operations costs relate to costs associated with catalysts, chemicals and demurrages

Source: KBC

Competitive gross refining margin

Indian Complex Refinery Singapore Complex Margin

Competitive gross refining margin

11.60

15.00

12 20

14.00

16.00 Average premium: US$5.23/bbl

10.30 12.20

8 00

10.00

12.00

M (U

S$/b

bl)

US$ 7.34/bbl

6.60 6.48 6.11

7.66

5.79 4.00

6.00

8.00

GRM

3.49

-

2.00

4.00

2006 2007 2008 2009 2010

GRMs expected to improve with increased complexity and capacity

Utilization of Mangla Crude, Natural Gas & Coal to further boost the GRM

27

g ,

Global refining margin outlookGlobal refining margin outlook

Benchmark refining margins

14

16

10

12

14

(US

$/bb

l)

6

8

10

finin

g m

argi

ns (

2

4

6

Gro

ss re

f

0

2

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

North West European Brent Singapore-Dubai US Gulf Coast WT I Reliance Industries Indian margin (a)

Refining margins expected to recover from 2011 onwards

28Source: KBC, Reliance Industries

Refining margins expected to recover from 2011 onwards

(a) Forecast made prior to Union Budget

Expansion to provide crude as well as product flexibility

Light6%

Light11%

Ultra-heavy

Expansion to provide crude as well as product flexibility

6%

Heavy31%

11%

Heavy25%

Light28%

heavy20%

e m

ix

Ultra-heavy63%

Ultra-heavy64%

Heavy52%

Crud

14MT 18MT 36MT

Light Heavy end

15%Light

distillatesHeavy end

15%Light di till t

Heavy end

14MT(current)

18MT(expected post phase 1 expansion)

36MT(expected post phase 2 expansion)

distillates29%

Propylene3%Middl

15%22%

VGO10%Middl

15%distillates22%

Fuel loss6%

y25%

uct

yiel

d

3%

Fuel loss5%

Middle distillates

48%

10%

Fuel loss4%

Middle distillates

49%

Middle distillates

47%Prod

u

14MT 18MT 36MT

Processing an increasingly high proportion of high sulphur and low API crudes

Focus on delivery of higher margin products (middle/light distillates)

(current) (expected post phase 1 expansion) (expected post phase 2 expansion)

29

Note: Ultra-heavy crude defined as having API<25, heavy crude with API 25 – 33, light crude with API>33Dar and Mangala crude with high tan and wax content classified as heavy crudeProduct yield – fuel and loss does not include natural gas

Source: Company information

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

export markets

1 5

g g y g

Flexibility to produce petrochemical feed stock

Euro IV & V grade at 87% in Gasoline pool and 78.4% in Diesel pool

8.8

1.5

LPG/Naptha

Gasoline

Euro III13.0%

Euro V49 9%

Gasoline: 8.8 MT

Diesel

Jet/Kero

Euro IV37.0%

49.9%

Euro IIIDiesel: 13.6 MT

13.6

2.5

1.4

Jet/Kero

Fuel Oil

21.5%

Euro IV47.2%`

0 6

3.9

5 6

7.7

2.30.7Coke

Propylene

Euro V31.2%

0.9 1 92.0 0.5

1.01.8

4.1

2.7

0.6

0.6

1.01.2

5.6

Others

Fuel& Loss / Residue

30

0.7 1.90.8

14 MT 18MT 36 MTNote: Others include bitumen, sulphur and HDT VGOSource: Company information

Phase 1 – Refinery Expansion Project Status : 62%

Basic E i i

Detailed E i i Procurement Construction

Phase 1 Refinery Expansion Project Status : 62%

All long lead items orderedBalance items to be

OSBL pipe racks are in advanced stage of completion

Engineering Engineering Construction

Model reviews completed

All Basic Engineering C l d Balance items to be

ordered by July-10.87 % Piping Bulk material ordering Completed & 41 % f i i l

advanced stage of completion & piping erection progressing in various fronts.ISBL Pipe rack , Technological structures & Heater works are

completed

Drawings released for all major civil

Completed

Short / Long Lead items’ Datasheets

% of pipes materials received at site.Total 579 out of 1523 Nos of Mechanical Tagged

structures & Heater works are progressing in full swing.Structural Steel fabricated & 5458 MT erected

Structure, Heater, Piping & Tankages works

Drawings for E & I works

issuedfor procurement

Schedule A packageEquipment received at site.

22673 MT of Tankages Fabrication & 19317 MT Erection Completed.

gare in Progress.

Schedule A package for all Units received.

31

Heavy Lift erection in the operational area (CDU/VDU/SGU)- 153 MT y p

32

OVERALL VIEW – PROCESS UNITS (REFINERY EXPANSION PROJECT)

33

DELAYED COKER UNIT- CIVIL WORKS FOR COKE DRUM STRUCTURE

34

1st Heavy Lift for Expansion Project - 342 MT & CHIMNEY WORKS AT 325 MW POWER PLANT 62 MTR OUT OF 220 MTR325 MW POWER PLANT- 62 MTR. OUT OF 220 MTR.

35

MAIN INTERCONNECTING PIPERACK ‘C’

36

REFORMER & EQUIPMENT ERECTION WORKS AT HYDROGEN MFG. UNIT

37

TANKAGE & PIPING WORKS FOR BS III

38

PIPING WORKS AT PIPERACK ‘K’PIPING WORKS AT PIPERACK K

39

Vadinar Power Plant Expansion : Bird eye view of GTG 1 & 2 AreaVadinar Power Plant Expansion : Bird eye view of GTG 1 & 2 Area

HRSG 1HRSG 2

HRSG 1

GTG 1

GTG 2

GTG-1

GTG-2

Supporting Infrastructure : Port / Jetty (Earlier)Supporting Infrastructure : Port / Jetty (Earlier)

41

Simultaneous loading operations ongoing at Berths A & B t V di ( t i )A & B at Vadinar (post expansion)

42

Financial HighlightsFinancial Highlights

43

Financial ResultsFinancial Results

ParticularsQE FY QE QE

Particulars 2009-10Jun-09 Mar-10 Jun-10Throughput - Million Tones 2.76 13.50 3.60 3.68 INCOME Income from operation 7 876 42 303 11 886 12 024Income from operation 7,876 42,303 11,886 12,024 Less : Excise duty & Taxes 1,334 5,897 1,489 1,517 Net Income from operation 6,542 36,406 10,397 10,507 Other Income 39 200 92 24 Total Income 6,580 36,606 10,489 10,531 EXPENDITURE Cost of Goods Sold 5,825 34,263 9,781 9,834 Operating Expenditure 256 1 077 285 281Operating Expenditure 256 1,077 285 281 Forex Loss/( Gain) (166) (661) (246) 9 Total Expenditure 5,915 34,679 9,819 10,124

EBITDA 665 1,927 670 407

Interest & Finance Charges 282 1,170 310 299 Operational Cash Profit 383 757 359 108Operational Cash Profit 383 757 359 108 Depreciation 179 728 182 181 PBT 203 29 178 (73)Tax 34 (1) - (3)

44

PAT 170 29 178 (70)GRM (USD/bbl) $ 6.74 $ 4.38 $ 5.12 $ 5.61

Comparative GRMComparative GRM

45

• Health Safety Environment

• Corporate Social Responsibilityp p y

46

Safe and efficient operationsSafe and efficient operations

The Refinery achieved 14.34+ Million Man Hours of Safe Operation with out any Lost Time Incident.

820 Lost Time Incident free da s on 30th J ne 2010 No fatalities at refiner since start of commercial

Safety

820 Lost Time Incident free days on 30th June, 2010, No fatalities at refinery since start of commercial production from 1 May 2008

Refinery received GREENTECH Safety Gold Award in Petroleum Refining Sector for outstanding achievement in Safety Management

Refinery received ISO 9001 and 14001 and OHSAS 18001 certification & Won British Safety Council International Award for 2009

Compliant with all the concerned environmental regulations

R i d 2 d i i th “F /B il I l ti Eff ti ” t f th MOPNG’ (a) Oil &

Reliability

Received 2nd prize in the “Furnace/Boiler Insulation Effectiveness” category of the MOPNG’s(a) Oil &

Gas Conservation Awards (2008) in its very first year of operation

The refinery’s laboratory has participated in an international Inter Laboratory Cross Check Programme (ILCP) conducted by ASTM committee, to benchmark to international standardsyPlanning and execution of major shutdowns on schedule

Received ‘Golden Peacock Award” for Occupational Health & Safety for the year 2010’ by the Golden Peacock Jury

On-stream factor of c100% in fiscal year ended March 2009

ff

Laboratory is ISO certified

Refinery capable of consistently operating at 14MT with simultaneous operation of all secondary processing plants at more than 100% capacity

Efficiencyp g p p y

Fuel and losses reduced from c7% in FY08 to c6% currently

High quality, bespoke MIS system – the Essar Refinery Integrated Management Systems (ERIMS)

Kitchen waste bio gas plant was inaugurated on 24th June’10 generating about 20kg of LPG per day.

(a) Ministry of Petroleum and Natural Gas

47

CSR - Community Development Program at VadinarCSR - Community Development Program at Vadinar

Operate 24hrs

operative Essar

Community

Health

Center, Mobile

Clinic, Mother &

Child C dChild Care and

OPD Centers.

Eye diagnosis and

surgery camp

organized jointly g j y

with District

Blindness

EradicationEradication

committee and

Shivand

Mission, Virnagar

48

Key Value DriversKey Value Drivers

E&P

CBM – Raniganj to

start commercial

Significant potential

of other CBM and Oil Execution of PSC for Ratna E&P start commercial

production by Q4

CY2010

of other CBM and Oil

& Gas blocks & R-series

Refining

Refinery Optimization started with processing of 25000 bpd Mangla Crude &

Phase – I Expansion to increase the

Phase – II expansion to increase throughput to 36Refining 25000 bpd Mangla Crude &

utilization of Natural Gas to begin in Q3 CY, 2010

to increase the throughput to 18 MMTPA

increase throughput to 36 MMTPA

Di t ib tiExpansion of Retail Outlets to 1700 by

Build on International Deregulation of S d l l l iDistribution Outlets to 1700 by

March, 2011distribution capabilityMS, created level playing

field for private sector

49

50