Essar Spending $250 Million on U.K. Stanlow Refinery

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Essar Oil U.K. (Cheshire, England) has committed to spending $250 million to upgrade its Stanlow refinery in northeast England on the back of strong fourth-quarter results for the financial year ending March 31, 2017.

The company wants to bump up the annual processing capacity of Stanlow by about 10% from 68 million to 75 million barrels. The refinery currently produces 16% of the U.K.'s road transport fuel and processed 9.09 million metric tons (MMT) of crude, a 1.3% increase on the previous year's 8.97 MMT.

The company is part of the Indian billionaire Ruia brothers' Essar Group (Mumbai, India), which sold off its domestic oil business Essar Oil to Russia's Rosneft (Moscow, Russia) and partners for $12.9 billion last month. The Stanlow refinery was not included in the deal, and the company said it has no plans to sell it.

Essar Oil U.K. Non-executive Chairman Prashant Ruia said: "The major investment we have confirmed in Stanlow will materially increase throughput and further grow revenues, building on the tremendous progress we have made in turning around the business over the past six years. It also demonstrates Essar's commitment to remain invested in the oil and gas sector."

Essar Oil U.K. Chief Executive Officer S. Thangapandian commented: "Essar has committed this year to a significant multimillion-dollar capex investment in the Tiger Cub project at Stanlow to deliver improved yields across the product slate and drive revenue growth. In addition, the continued ambitious expansions of our U.K. retail network and direct aviation fuel supply business are also important strategic elements in the drive to build a fully integrated downstream energy company. This is on the back of a strong fiscal-year 2017 performance, following record results posted the previous year. Although we saw a marked $2.1 per barrel decrease in the wider industry benchmark margin, our excellent operational reliability and ongoing margin booster projects saw our own margins reduce by less than half this amount, which demonstrates the enormous progress made within the business."

Industrial Info is tracking the company's Tiger Cub Expansion projects at Stanlow, including the expansion of Crude Unit 4 and a revamp of the fluid catalytic cracking unit (FCCU). The work at Unit 4 will see its capacity increase from 200,000 barrels-per-day (BBL/d) to 220,000 BBL/d.

Essar has invested $800 million since it acquired the refinery in 2011. In 2015, the refinery was reconfigured and optimised to a single-train operation, which increased the yield of high-margin products such as gasoline and middle distillates. The crude slate has also been diversified with the introduction of 37 new grades.

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