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Essar Oil UK to spend USD250 MM upgrading Stanlow refinery

September 08/2017

MOSCOW (MRC) Essar Oil UK expects a USD250-MM upgrade of its Stanlow refinery in northwest England to improve its basic profit margin by USD1/bbl as it will be able to process a greater variety of cheaper crude oils and raise output, its chief executive said on Wednesday, said Reuters.

The company, owned by the Indian billionaire Ruia brothers' Essar Group, plans to raise the annual processing capacity of Stanlow by about 10% to 75 MMbbl. The company's gross refining margin, the profit from processing a barrel of crude, stood at USD9.20/bbl in the March quarter, up from USD6.80 a year ago.

The Ruias, who last month completed the sale of their Indian refining business Essar Oil to a consortium led by Russia's Rosneft for USD12.9 B, have so far invested USD800 MM in Stanlow since acquiring it from Royal Dutch Shell in 2011.

Essar plans to complete the expansion of the crude unit and revamp its catalytic cracker by July, S. Thangapandian told Reuters, adding that the refinery would be shut for at least a month to undertake the upgrade.

"The final schedule for the shutdown will be drawn up in two to three months' time," he said, adding that following the expansion the company's petrochemical production would also rise by about 10%.

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

The refiner earlier this year also took in for the first time a consignment of Eagle Ford shale oil from the United States and has booked two more cargoes, for delivery in October and November, to take advantage of price differentials.

While the supply glut has weighed on Brent and West Texas Intermediate prices, the spread between the two grades holds at about USD4.50/bbl.

"There is scope to buy more cargoes from the US if the differential between Brent-WTI stays above USD3/bbl," Thangapandian said. In the last year Stanlow has processed 37 more grades of crude and the expansion is geared towards further diversifying supplies to process cheaper grades while improving middle distillate yields.

Essar UK supplies 16% of the UK's demand for road transport fuels and operates 36 retail fuel stations but Thangapandian said the company aims to expand this number to some 400 in the next five years.

As MRC informed earlier, India's Essar Group will payUSD1.18 apiece to the minority shareholders who tendered Essar Oil shares under a delisting offer ahead of the company's sale to a consortium led by Russian oil major Rosneft. India's Essar Group in August closed the USD12.9 B deal to sell 98.26% stake in Essar Oil to a consortium of Rosneft, trader Trafigura and Russian fund UCP. The group will pay an additional 8.80 B rupees to minority shareholders, as under the deal shares are valued at 338.28 rupees apiece, it said in a statement.
Author:Anna Larionova
Tags:petroleum products, gas processing, petrochemistry, Crude oil, Rosneft, UK, India.
Category:General News
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