The valve is needed for when the compressor is still cold (after stop) or when it is running in very cold conditions (winter).
When the compressor oil is cold, the valve is bypasses the oil cooler so no oil flows through the cooler. This is done to heat up the oil as soon as possible to remove water condensate.
Low temperatures are the number 1 enemy of screw compressors. The compressor needs to heat up quickly to remove any water condensate as quickly as possible.
If you remove it, one of two things will happen: all oil will flow through the oil cooler. Or no oil flows through the oil cooler at all. Probably the second thing will happen as it's the path of least resistance.
If you're in India and it's very hot and the compressor is running all the time, than basically this thermostatic valve isn't doing much.
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