Ruias-owned Essar Oil UK plans to invest around $250 million to expand the capacity of its Stanlow Refinery in the financial year ending March 2018.
Ruias-owned Essar Oil UK plans to invest around $250 million to expand the capacity of its Stanlow Refinery in the financial year ending March 2018. The company aims to take total production from the Stanlow refinery, that it acquired in 2011, to 75 million barrels per year from existing 68 million barrels at present. The refinery capacity is seen increasing to 9.7 mmtpa from 9.09 mmtpa.
S Thangapandian, chief executive officer of Essar Oil UK, said in a conference call: “The development of refinery will further open up the basket of crude resulting in lower crude cost. Also, the production of high-yield and high-value product such as of propylene will increase, resulting in higher revenue. We believe the entire exercise will result in addition of $1 per barrel to margins in FY18.”
The addition of $1 per barrel to the gross refining margins would translate into $70-75 million in revenues, P Sampath, chief financial officer of Essar Oil UK, said.
The company also plans to increase its overall production of petrochemical products by around 10% in FY18 as it prepares to take on with increased focus on cleaner transport by the UK and European governments. The company has already increased the production by 8-10% in the last seven to eight months, Thangapandian said.
“Petrochemicals is a high-value, high-margin product and helps to move some of the products whose demand is going down — due to clean transport focus — by high-value products. The part of the turnaround project we are executing will further increase the production of petrochemicals by 5-10%, but we are looking further down the road for new technological opportunities that can help us improve the production in the long term,” Thangapandian added.
The company also has plans to increase the retail fuel outlets in the UK to 55 from the current 36 by March 2018 and to 400 retail outlets in the next 3-4 years, Thangapandian said. Investments for retail expansion will be worked in due course, he added.
Total investments to turn around the refinery by Essar Energy would be around $800 million once the current round of investment is over. The company reported a 17% drop in March quarter net profit to $54 million, while the current price gross refining margin was up at $9.2 per barrel compared with $6.8 a barrel a year ago.
Revenue for the March quarter was up 39.5% to $1.32 billion. For the full year FY17 the company reported net profit of $168 million on a revenue of $4.92 billion.