Essar pledges proactive' investments in UK refinery

Indian conglomerate Essar's UK arm today announced robust financial results for this year, with revenues of USD 5.4 billion, 10.2 per cent up from the USD 4.9 billion reported in the last financial year.

Essar Oil UK, which owns and operates the Stanlow Refinery in Britain, pledged proactive investments into the refinery as it built on a period of "turnaround".

Stanlow has emerged as a top tier refinery in Europe, with 16 per cent market share in the UK and a growing presence in the retail and aviation sectors, said Essar Oil UK chairman Prashant Ruia.

We will continue to make proactive investments in technology to build a sustainable business that remains competitive in the rapidly changing global energy market, he said.

Stanlow refinery, at Ellesmere Port in north-west England, has been described as a "key national asset", producing over 16 per cent of the UK's road transport fuel demand. It has completed the execution of all project upgrades during the turnaround period and it is now expected that margin improvements will yield an incremental margin of between USD 75 million and USD 80 million annually.

Essar Oil UK Chief Executive Officer, S. Thangapandian, hailed the completion of Project Tiger Cub, the company's massive investment plan for Stanlow, as a major positive which had exceeded expectations.

Thangapandian said, Overall, this was ultimately a robust performance following a record-breaking first six months of the financial year Going forward, the focus remains on the delivery of further margin booster initiatives to improve yields and increase volumes to grow market share.

According to the results announced, Essar's optimised reconfiguration to a single train site, material diversification of the crude slate and an ongoing focus on margin booster initiatives in recent years resulted in a delta over the benchmark margin of USD 4.00/bbl, as against under USD 1.00/bbl in 2012.

Essar Oil UK Chief Financial Officer Sampath P said, Despite the significant capex investment and planned reduction in throughput due to the turnaround, the company still posted an EBITDA of above USD 300 million for the third consecutive year and a Profit after Tax (PAT) of USD 161 million.

The major optimisation improvements implemented during the year will deliver increased margins going forward on the back of higher throughputs, reduced crude costs and enhanced higher value product yields," he said.

Including FY18, Essar said it has invested over USD 850 million since acquiring Stanlow in July 2011, helping to turn around the business and build a company that is both profitable and sustainable.

For the first time, the company leased storage in Rotterdam, together with blending and jetty infrastructure, in order to cater to gasoline export markets directly.

A key priority for the firm is increasing share of the market for the direct supply of aviation fuel to leading carriers, with agreements now in place with airlines at a number of UK airports. Essar said it remains a major player in the wholesale supply of Jet A-1 to UK airports.

The Essar network has grown to over 50 stations since entering the UK retail market. The first company-owned, flagship site will open opposite the Stanlow Refinery later this year.

"Safety performance remains a core value and critical business objective, with continuous investment in Health, Safety and Environment (HSE) to further improve standards and reduce risk. The 2018 turnaround was the safest delivered in the history of the site, with world class personal safety results," Essar said in a statement.

Essar Oil UK, a subsidiary of Essar Energy Limited, said that it has established working capital facilities and has no long-term debt.