Essar Oil UK to see rise in margins following refinery upgradation
The company has completed an efficiency enhancement programme, following which Stanlow Refinery's annual crude oil processing is projected to go up to 72 million barrels per day.
Apr 17th, 2018
Essar Oil (UK), which owns and operates Britain’s Stanlow Refinery, will touch double-digit margins this fiscal after it completed a USD 250 million investment in upgradation of the refinery, its chief executive S Thangapandian said.
The company, controlled by Ruia-family of Mumbai that sold Essar Oil to Russia’s Rosneft for USD 12.9 billion, has completed efficiency enhancement programme, the Project Tiger Cub, following which Stanlow’s annual crude oil processing is projected to go up to 72 million barrels per year from 68 million barrels per year, he said.
“The project was completed in January-March quarter but the full payback from Tiger Cub will take around 12-15 months,” Thangapandian added.
The refinery throughput in 2017-18 fiscal was around 53.8 million barrels, which was lower than normal due to a shutdown undertaken for completion of Project Tiger Cub.
In 2018-19, the throughput is projected at 72 million barrels considering that refinery was not operational in the first 20 days of April because of the same turnaround shutdown. “Refinery throughput is expected to reach the targeted level in 2019-20,” he said.
The company had earned USD 9.6 on turning every barrel of crude oil into fuel in 2017-18 fiscal. “The gross refining margin is projected to increase to USD 10.1 per barrel in FY 2018-19,” he added.
Thangapandian said the company, which now has 55 petrol stations in UK, is targeting 400 pumps in five years.
It has also entered into the direct aviation fuel supply market, selling the fuel produced at Stanlow to major airlines such as Emirates, Etihad, Jet2.com and Oman Air.
These direct sales presently make up for 10 per cent of the 1.2 million tonnes of jet fuel produced at Stanlow. Going forward, the company is looking to scale up the sales to 40-50 per cent.
Essar has invested over USD 800 million since acquiring Stanlow in July 2011.
Source: ET Energyworld