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Essar Oil to invest USD250 million to upgrade UK’s Stanlow refinery

Essar Oil (UK), which owns and operates the Stanlow Refinery in Ellesmere Port in northwest England, said it will invest USD250 million to expand the capacity of the refinery which it bought from Royal Dutch Shell in 2011. The investment will expand the refinery’s annual throughput from 68 million barrels to 75 million barrels and will enhance the refinery’s yield to higher value products.

The refinery, which produces 16% of the UK’s road transport fuel demand, processed 9.09 million metric tonnes (MMT) of crude oil during the financial year ending March 31, 2017, up 1.3% over the previous year.

“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,” said Prashant Ruia, nonexecutive chairman, Essar Oil (UK).

Essar mostly processes light oils because of stringent emission standards in the UK. But Stanlow’s use of North Sea crudes has been reduced to about 50-70% from about 85%, with an increase in crude oil purchases from north and west Africa.

“Essar has committed this year to a significant multi-million dollar CapEx investment in the Tiger Cub project at Stanlow to deliver improved yields across the product slate and drive revenue growth,” S. Thangapandian, CEO, Essar Oil (UK) said.

“In addition, the continued ambitious expansion of our UK retail network and direct aviation fuel supply business are also important strategic elements in the drive to build a fully integrated downstream energy company.”

Essar Oil (UK) currently operates 36 retail outlets, which the company ambitiously aims to expand to 400 in the next five years.

The Ruias, which last month completed the sale of their Indian refining business Essar Oil to a consortium led by Russia’s Rosneft for USD12.9 billion, has so far invested USD800 million in Stanlow.

Announcing the results for the fourth quarter, Essar Oil (UK) said that its EBITDA stood at USD86 million compared to USD55 million during the same period a year ago. The company, however, reported a 16.9% drop in net profit to USD54 million.