- Creation of Essar Energy Transition repositions Essar for growth and resurgence.
- US $2.4 billion investment program includes blue and green hydrogen, ammonia, biofuels, and the decarbonisation of refinery in the UK.
- To reduce about 20% of the industrial emissions in North West England.
- Company to invest US$1.2 billion investment in India.
[London, 27 February 2023]: Essar Group, invested in Energy, Metals and Mining, Infrastructure and Technology sectors, today announces the formation of Essar Energy Transition (“EET”) to drive the creation of the UK’s leading energy transition hub in North West England.
EET plans to invest a total of US$3.6 billion in developing a range of low carbon energy transition projects over the next five years, of which US$2.4 billion will be invested across its site at Stanlow, between Liverpool and Manchester and US$1.2 billion in India.
EET will include:
- Essar Oil UK, the company’s refining and marketing business in North West England;
- Vertex Hydrogen, which is developing 1 gigawatt (GW) of blue hydrogen for the UK market, with follow-on capacity set to reach 3.8GW;
- EET Future Energy, which is developing 1 GW of green ammonia in India, targeted at UK and international markets;
- Stanlow Terminals Ltd, which is developing enabling storage and pipeline infrastructure; and
- EET Biofuels, which is investing in developing 1 MT of low carbon biofuels.
EET’s investment programme will play a major role in accelerating the UK’s low carbon transformation, supporting the government’s decarbonisation policy and creating highly skilled employment opportunities at the heart of the Northern Powerhouse economy.
The investments, across a range of hydrogen production technologies, decarbonisation, biofuels (road and aviation), and infrastructure projects, will contribute to North West England quickly becoming one of the leading post-carbon industrial clusters in Europe. EET believes that these investments will support the reduction of around 3.5 million tonnes of carbon dioxide, around 20% of the total industrial emissions in North West England.
The launch of EET heralds Essar’s repositioning for growth and resurgence. Essar is now investing in new forward-looking assets with modern, efficient, and ESG-compliant technologies to last for several decades. Other sustainability investments planned by the Essar Group beyond EET include the creation of an LNG value chain in India, including LNG truck manufacturing and LNG fuel stations, setting up a pellet plant in Odisha, in eastern India and a 4-million tonnes per annum green steel complex at Ras-Al-Khair, Saudi Arabia.
EET’s strategy is founded on the fact that hydrogen and biofuels are fast becoming globally significant fuels of the future and that the UK is positioned strongly to spearhead the rapid growth of the European low carbon fuels market. The UK already benefits from an advanced regulatory and policy framework to support low carbon energy production, including the UK government’s target of achieving 10GW of hydrogen production by 2030, alongside developing low carbon hydrogen infrastructure, expertise and significant customer demand. Such is the scale of the market growth opportunity that EET estimates approximately two-thirds of its aggregate cash flows could come from diversified low carbon sources before the end of the decade.
As a core part of the HyNet cluster, Essar’s Stanlow site already plays a prominent role in the UK’s energy transition planning framework, following the selection of HyNet by the UK government in 2021 as one of only two hydrogen clusters in the country to potentially be supported through to full operations.
The Stanlow refinery itself will also achieve a 75% reduction in carbon emissions before the end of this decade as part of EET’s decarbonisation plans, making this strategically critical fuel supplier to the UK one of the most sustainable refineries in Europe.
In addition to the US$2.4 billion investment in the UK, EET will also invest US$1.2 billion in developing a cost-efficient global supply hub for low carbon fuels in India, including green hydrogen and green ammonia. Ammonia will be shipped from India to the UK, Europe and globally to meet expanding market demand for green hydrogen.
EET’s investment in India will help deliver on the country’s emerging hydrogen ambition. The Indian government’s supportive regulatory framework is designed to help position the country as a leading global hub of green hydrogen production and exports, as set out in its National Green Hydrogen Mission, approved by the Indian government on 4 January 2023.
Prashant Ruia, Director, Essar Capital, said:
“The launch of EET is a major milestone in Essar’s long-standing commitment to put the UK at the forefront of low carbon energy. We are excited about the opportunity to drive the UK’s energy transition by producing low carbon future fuels which will help eliminate around 20% of the industrial carbon dioxide in Northwest England. In doing so, it will provide a blueprint for how traditional industries globally can be successfully transformed into hubs for the production of future energies.
Tony Fountain, Managing Partner of Essar Energy Transition, said:
“EET’s ambitious investment plans will not only help deliver the UK’s net zero ambitions and the enormous environmental benefits therein, but will also secure the long term sustainable future for Stanlow, protecting and creating new highly skilled job opportunities at the heart of the Northern Powerhouse economy for generations to come.”
Michelle Lewis, Corporate Affairs Director, Essar
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Peter Ogden, Powerscourt
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About Essar Global Fund Limited
Essar Global Fund Limited (EGFL) is the holding company of Essar Group, and will be the majority ultimate holding company of Essar Energy Transition. EGFL is a global investor which owns a number of world-class assets diversified across the core sectors of energy (comprising exploration and production, refining and marketing, and power businesses), infrastructure and & logistics (comprising ports, Stanlow Terminals and projects), metals and mining, technology and retail (comprising technology solutions and digital retail platforms). EGFL invests with a sense of active ownership, which involves direct engagement with the management of the respective businesses. Its portfolio companies have aggregate revenues of around US$15 billion and employ over 7,000 people.
About Essar in the UK
Essar is a leading UK-focused downstream energy company whose main asset is the Stanlow Manufacturing Complex, one of the most advanced refineries in Europe situated close to the major cities of Liverpool and Manchester. Stanlow has 800 employees, and is a key strategic national asset, annually producing over 16% of the UK’s road transport fuels, while playing a key role in Britain’s broader petrochemical industry.
Since acquiring Stanlow in 2011, Essar has invested $1 billion in margin improvement and other efficiency initiatives to ensure the refinery remains competitive in a rapidly changing market. The company is a major supplier in the North West and beyond, with customers including most of the major retail brands operated by international oil companies and supermarkets, Manchester Airport, leading commercial airlines and the region’s trains and buses.
Essar in the UK is committed to playing a key role in the decarbonisation of the UK economy, with ambitious plans to develop the UK’s leading energy transition hub at its Stanlow site in the North West of England. Essar’s plans will see the site and the surrounding North West region of England become one of the leading post-carbon industrial clusters in Europe, with major investments across a range of hydrogen production (blue and green), decarbonisation, biofuels (road and aviation), and infrastructure projects. These include the construction of two new low carbon hydrogen production units on site by Vertex Hydrogen, as part of HyNet. Vertex, which is majority owned by Essar, is developing 1 gigawatt (GW) of blue hydrogen for the UK market, with follow on capacity planned to reach 3.8GW (nearly 40% of the UK government’s new target of 10GW of low carbon hydrogen for power, transport, industry and homes by 2030).
About Prashant Ruia
Prashant Ruia, Director Essar Capital, is a member of the founding family of Essar Group, and has overseen US$40 billion of successful value creation and monetisation of investments by the group over the last 35 years. Prashant has led the management of Essar’s global investments in energy, including those in the UK, and has led the focus on decarbonisation inherent in the design of EET over the last two years.
About Tony Fountain
Tony Fountain, the Managing Partner of EET, has 35 years of experience in energy, particularly focused on the UK and Indian markets. He has previously been responsible for some of the world’s largest and most complex downstream businesses, including as Executive Chairman of Nayara Energy and CEO of Refining & Marketing at Reliance Industries, which operates the largest oil refinery in the world. Tony was also previously CEO of the UK’s Nuclear Decommissioning Authority and was previously with BP for 25 years in a variety of senior roles.