Essar Oil UK posts $70 million profit in FY15

Essar Oil UK, which owns and operates UK's Stanlow refinery, today reported a net profit of $70 million for the year ended March 31 compared with a loss of $121 million in the previous fiscal.

The profit was driven by highest-ever refining margin, the company said in a statement here.

The refinery made $7.80 on turning every barrel of crude oil into fuel in 2014-15 as against $4.08 per barrel gross refining margin in the previous fiscal.

This was "primarily due to refinery reconfiguration and improved benchmark margins. Stanlow has outperformed the Northwest European FCC Cracking margin off Dated Brent for the year, which stood at $2.66 per barrel," it said.

Gross revenues for the year dropped 11% to $7.6 billion compared with $8.5 billion in FY14 largely due to the lower crude oil price, which fell 21%.

Essar Oil UK is the unlisted subsidiary of Essar Energy Ltd and does not give quarterly earning numbers.

"During the year, Stanlow Refinery, located in Ellesmere Port and meeting about 15% of the UK's transport fuel demand, processed 8.54 million tonnes of crude, an 18% increase from previous year's 7.24 million tonnes," it said.

Stanlow in 2014-15 began to operate as a reconfigured and optimised single train site to increase the production of high value products. In the new single train operation, higher margin gasoline and middle distillates yield improved by about 5% compared with the representative period of FY14 and lower margin fuel oil and naphtha reduced by about 6%.

Essar Oil UK Chairman Naresh Nayyar said: "This was a significantly better year for us. The impact of several initiatives taken in recent years is now being reflected in the operational and financial performance of the company."

The business, he said, will continue to improve. "We also take pride in saying that the company delivered 100% product availability to our customers throughout the period, significantly contributing to energy supply security in the region," he said.

Essar has taken several initiatives since acquiring the Stanlow in 2011, in order to improve and optimise the operational and financial performance of the company.

Besides re-optimising the configuration, the company has connected the refinery to the natural gas grid, materially diversified its crude slate, significantly improved the production of high value products and delivered a variety of cost efficiencies. This has added $3 a barrel to margins.

Essar Oil UK Chief Executive, Volker Schultz said: "We continued to receive strong support from our shareholders, who helped substantially strengthen the balance sheet by equity capitalisation. With strengthened operations and a refinanced business, we can now look ahead with renewed confidence, as we pursue projects to further strengthen our operation and improve the profitability of the business.