Essar Energy turns around UK’s 2nd largest refinery
28 Nov 2012 4:51 AM IST
London-listed Essar Energy plc has turned around UK’s second largest refinery Stanlow within a year of taking over it from Royal Dutch Shell, posting a pre-tax profit of $197 million in six month to September 30. ‘Current price EBITDA at Stanlow rose to $197.2 million compared with $22.2 million in the first eight months of ownership to March 2012,’ the company said announcing its second quarter earnings. Shell divested its refinery assets for not being profitable.
Stanlow had been run by Shell as a cost centre and had been for sale for some time when Essar purchased it, by which time employees had concerns for their future. Essar Energy acquired the refinery for $350 million from Shell on July 31, 2011.
Gross refinery margins rose to average $8.03 per barrel, compared with $3.06 a barrel in the first eight months to March 2012.
“Of this margin uplift, $1 per barrel is due to internal initiatives and investments as part of the ‘100 day plan’ put in place following acquisition by Essar for $350 million in July 2011,” the company said. Essar said initiatives and investments at Stanlow aimed at improving margins by a total $2-$3 per barrel by 2014-15 (including the $1/barrel just achieved) are continuing, including installation of natural gas to fuel the six boilers on site which will be completed in the coming weeks.
Stanlow is the second largest UK refinery, with nameplate capacity of 2,96,000 barrels per day, and an above average Nelson complexity of 8.2. Stanlow produces 15 per cent of UK transport fuels. It has started to use 11 lower cost crudes from various geographies like Africa, Canada to optimise efficiencies.
Essar Oil UK employs 1,035 people directly, plus 500 contractors and 5,000 indirectly employed through the extended value chain. It brought in a small handful of people from its Vadinar refinery business in India, retained most of the Stanlow senior management team, attracted some experienced new recruits, and ensured the existing workforce remained committed by mirroring the previous owners conditions and rewards. A new CEO, Volker Schultz, was appointed to Essar Oil UK after 23 years at BP.
Stanlow had been run by Shell as a cost centre and had been for sale for some time when Essar purchased it, by which time employees had concerns for their future. Essar Energy acquired the refinery for $350 million from Shell on July 31, 2011.
Gross refinery margins rose to average $8.03 per barrel, compared with $3.06 a barrel in the first eight months to March 2012.
“Of this margin uplift, $1 per barrel is due to internal initiatives and investments as part of the ‘100 day plan’ put in place following acquisition by Essar for $350 million in July 2011,” the company said. Essar said initiatives and investments at Stanlow aimed at improving margins by a total $2-$3 per barrel by 2014-15 (including the $1/barrel just achieved) are continuing, including installation of natural gas to fuel the six boilers on site which will be completed in the coming weeks.
Stanlow is the second largest UK refinery, with nameplate capacity of 2,96,000 barrels per day, and an above average Nelson complexity of 8.2. Stanlow produces 15 per cent of UK transport fuels. It has started to use 11 lower cost crudes from various geographies like Africa, Canada to optimise efficiencies.
Essar Oil UK employs 1,035 people directly, plus 500 contractors and 5,000 indirectly employed through the extended value chain. It brought in a small handful of people from its Vadinar refinery business in India, retained most of the Stanlow senior management team, attracted some experienced new recruits, and ensured the existing workforce remained committed by mirroring the previous owners conditions and rewards. A new CEO, Volker Schultz, was appointed to Essar Oil UK after 23 years at BP.
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