Essar Energy signs exclusivity agreement for Stanlow Refinery

Essar Energy PLC, an India-based integrated energy company, has entered into an exclusivity agreement with Shell U.K. for the proposed sale of the Stanlow Refinery in the U.K. The Stanlow Refinery is the second largest refinery in the U.K. This acquisition will give Essar direct access to the U.K market. The Stanlow Refinery reported earnings for the first six months of 2010 of US$62.7 million. Under the terms of the purchase agreement, payment for the refinery will be made in two separate payments of US$175 million. The crude oil, refined products and other inventory of Stanlow Refinery, which are valued at approximately US$789 million, will be part of a separate payment. Other parts of the agreement include that Essar Energy will purchase crude oil and feedstocks for the refinery exclusively from Shell on a spot basis for five years following the acquisition. In addition, Essar Oil UK will be responsible for operating and maintaining the Shell Higher Olefins Plant, Alcohols unit and the North West ethylene pipeline which are being retained by Shell. The acquisition is expected to be completed by the end of 2011. Naresh Nayyar, chief executive of Essar Energy, states, “We are very pleased to have reached an agreement regarding Stanlow, which is a high quality refinery in terms of its employees, its assets, its location, and its customer base. Stanlow also fits very well with our strategy of providing options for the export of high quality products from our Vadinar refinery in India.” (February 21, 2011)