Having exited oil refinery business in India after concluding 98 per cent stake sale in Essar Oil to Rosneft and a consortium led by Trafigura-UCP in a $12.9 billion deal last month, the Ruia family (promoter of Essar Group) re-emphasised its focus on the oil refinery business through fresh capex in UK arm. On Wednesday, Essar Oil (UK) that owns and operates UK’s Stanlow Refinery, announced to invest $250 million in expanding its refining capacity.
The company said that capital expenditure in FY18 will lift the annual throughput from existing 68 million barrels to 75 million barrels and the project will also result in enhanced yields of high value products along with reducing crude cost and driving revenue growth. The company further disclosed that it is targeting 400 fuel retail outlets over the next five years.
“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, non-executive chairman, Essar Oil UK.
Announcing the results for fourth quarter the firm said that its EBITDA stood at $86 million as against $55 million a year ago. The company, however, reported a 16.9 per cent drop in net profit to $54 million. The current price Gross Refining Margin (CP GRM), rose to $9.2/bbl at the end of the quarter as against $6.8/bbl in Q4 FY16, the company said.
Having invested $800 million since acquiring Stanlow in July 2011, S Thangapandian, CEO, Essar Oil UK said, “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. 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.”