Essar Oil UK plans to focus on increasing its jet fuel production from its Stanlow refinery in the UK as it has higher life span. The refinery, at present, supplies 100% of the jet fuel requirement at Liverpool and Leeds airports, and 85% of the requirement at Manchester airport. In addition, the firm has also started to supply jet fuel to the busy Heathrow airport in London through a tie-up with BP.
“We are not looking at product diversification but plan to make higher value products,” said S Thangapandian, CEO, Essar Oil UK. It is expected that with the world focusing on electric vehicles, the demand for diesel and petrol may be affected, if at all, but jet fuel demand is likely to grow.
Essar Oil UK is an Indian investment in the UK and operates 55 retail outlets in the country fulfilling 16% of the country’s petroleum demand. The refinery has an annual throughput of 75 million barrels after it implemented Tiger Cub, an efficiency upgradation programme. Earlier, it was 68 million barrels. The gross refining margin of the firm in 2017-18 was around $11 per barrel and expected to remain the same this year. In addition, the refinery also has a petrochemical capacity of 360 KT per year. The capital expenditure in the current financial year is expected to remain subdued as it has made substantial investment under Tiger Cub last year.
The refinery is now capable of producing 145 KT of aviation fuel per month which was 120 KT before implementation of Tiger Cub. However, according to Thangapandian, the full payback period for Tiger Cub will be around 12-15 months. On crude, he said $60-70 per barrel is a comfortable level for both producers and consumers. The prices have breached the $70 per barrel mark.