Transport Fuels

Essar Oil UK to expand retail operations

Essar Oil UK to expand retail operations
Photo courtesy of Essar Oil UK.

Essar Oil UK, which is part of India’s Essar Energy, said it plans to aggressively grow its fuel retail operations in the UK to 400 outlets, from the current seven. Essar Oil UK reported its highest-ever net profit in Fiscal Year 2015-2016 to USD 244 million, from a mere USD 70 million last year, posting gross refining margins of USD 9.3 per barrel, from USD 8.3 per barrel a year ago.

“Retail sales can help us push our margins by USD 2-3 a barrel of refined fuel, as we can gain on dealer commissions and other areas of downstream integration,” said Essar Oil UK Executive Chairman Naresh Nayyar.

The retail expansion is capex neutral, as they will re-brand some existing dealer-owned and -operated outlets.

Since Essar Energy acquired Stanlow Refinery in Ellesmere Port from Shell in July 2011, Essar has invested USD 694 million, including USD 350 million in acquisition cost from Shell UK.

The Stanlow Refinery is the UK’s second largest refinery in Britain. It currently supplies 16% of the UK’s fuel requirements. It processed 8.97 million tonnes of crude oil in 2015-2016.

“Stanlow continued to benefit from its optimised single site operation, which increased the yield of high margin products such as gasoline and middle distillates, while reducing production of lower margin products like naphtha and fuel oil,” he said.

Its parent company has committed to invest USD 137 million in major improvements at key units at Stanlow, which will deliver further reduction in crude costs and improved yields across the product slate.

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