UK looks to invest $250 million in its Stanlow refinery
to increase production, improve focus on high-value products and expand its crude oil sourcing basket to save costs and improve margins.
UK will invest $250 million as capital expenditure and maintenance in its Stanlow refinery
to improve throughput and yields," the company said in its statement on Wednesday. The investment
will be funded through internal accruals.
The company officials added that the $250 million includes $200 million towards capital expenditure and another $50 million as working capital requirements. The company so far has invested up to $800 million to turn around the Stanlow facility. "Major investment
in 2018 will increase annual throughput from 68 million to 75 million barrels," the company said in its statement. These investments will be completed in the current financial year and is expected to bring in an additional margin of $1 per barrel for the company.
"Production of high-value products like ethylene will increase, resulting in an additional margin of $1 per barrel from where we are today. The biggest gain comes from opening up our crude basket and hence reduce crude cost," company officials said on a media call on Wednesday. The company has already expanded its crude oil sourcing beyond the North Sea, to geographies like North America and Africa.
The company also looks to further increase its petrochemicals capacity. "Petchem production has increased already by 8 per cent, the focus is to increase it further and studying those possibilities and will have clarity in the next 8-10 months," company officials said on the media call.
The company also looks to expand its retail network in UK from the current 36 stations to 400 stations in the next five year's time. Essar Oil
UK did not share any investment
figures for these outlets. However, the company said, these 400 stations would be a combination of company-owned and franchise-owned outlets. A company-owned outlet entails a rough investment
figure of $2 million per station.
Even as the company looks to invest further in this facility, it is also working on a plan given the increasing focus on the usage of electric vehicles. "There are going to be one of the challenges the petroleum industry is going to face in the years to come. We have started internal discussions and a core team has been formed to understand how this is going to impact the petroleum sector as a whole and Stanlow in particular. We are looking from moving from the typical transportation fuel to higher value added products. We will have a better clarity from the government side as we move forward," company officials said on the call.
UK Chief Executive Officer, S Thangapandian said diesel demand in UK has already taken a hit. "Diesel demand was growing until last three or four months, but now the demand is static with new regulations, which is now bringing the market to gasoline, where demand is growing," he said commenting on the demand situation.
(UK) Limited is a subsidiary of Essar Energy Limited, which owns and operates the Stanlow Refinery
located on the south side of the Mersey Estuary near Liverpool.