Essar Oil (UK), which owns and operates the Stanlow refinery, on Monday reported a net profit of $244 million in FY16, nearly 249% higher than $70 million in FY15. During the year, Stanlow, which produces 16% of the UK’s transport fuel demand, processed 8.97 million tonnes of crude, a 5% increase on the previous year’s 8.54 million tonnes.
Essar Oil UK, which claims to be a debt free company, targets to grow its retail network within the UK market to 400 sites over the next three years. Currently, the company operates seven retail sites, said Naresh Nayyar, executive chairman of the company.
The firm sees diesel demand growing at 2-3% in the European market, while demand for petrol which saw a drop of 2-2.5% in the past couple of years is seen stagnant now. Nayyar ruled out any immediate stake sale in the Stanlow refinery. The executive maintained that the immediate strategy is to create a economical sustainable model for the project.
In FY16, gross revenues stood at $4,992 million, a 34% drop against $7,615 million in FY15, primarily due to the lower crude oil price which fell 44% year-on-year average. EBITDA was a record $359 million for FY16, against the $177 million reported for FY15.
“Stanlow continued to benefit from its optimised single train site operation, which increased the yield of high margin products such as gasoline and middle distillates, whilst reducing production of lower margin products like naphtha and fuel oil,” the firm said.
The Ruias-owned company plans a capex investment of $137 million in project Tiger Cub for major improvements to key units at Stanlow which will deliver further reduction in crude costs and improved yields across the product slate.
“Looking forward, our ongoing margin improvement initiatives, major capex investment project and ambitious plans for downstream integration through the UK retail sector will deliver a truly sustainable and successful future for us,” Nayyar added.
Essar has diversified the crude slate with the introduction of 25 new grades, connected the site to the natural gas grid and delivered a wide range of cost efficiencies. The company has spent $545 million since acquisition in its capital investment programme.