Essar Energy said it would mothball a small crude unit and start a $100 million cost improvement programme at UK's second-biggest oil refinery as part of efforts to stem a sharp decline in refining margins.
A major planned maintenance shutdown and a furnace incident last year at the Stanlow refinery — which supplies about 15% of UK's transport fuel requirements — coupled with weak commodity prices hit output and refining margins.
Essar Energy, which received a possible 900-million-pound takeover offer from its largest shareholder, said third-quarter throughput at Stanlow fell 68% to 5.8 million barrels. Throughput at the refinery is expected to be about 56 million barrels in the current financial year, down from the company's previous estimate of 59 million barrels.
Essar Energy, the power and oil and gas arm of privately held Essar Group, said price gross refining margins at Stanlow were a negative $2.61 per barrel during the quarter, compared with $7.22 per barrel a year earlier.