As Insider publishes the annual Top 500 companies list, Essar Oil’s chief executive Srinivasalu Thangapandian reveals plans for the Stanlow refinery.
Essar Oil is number three in this year’s ranking of the North West’s Top 500 companies. In 2018 and 2017 it was number one. In 2016 it was in fourth place, in 2014 sixth and in 2013 slightly outside the top ten at number 435. Essar, therefore, is one of Insider’s #Formidable500 a mainstay of the top ten for the last five years.
Chief executive Srinivasalu Thangapandian, or Thanga as he introduced himself, has been integral to that growth. Insider caught up with him before the International Trade Awards, where Essar was in the running for Company of the Year.
The refinery dates back to 1924, when a small bitumen plant was established, and Stanlow and Thornton railway station was opened in 1940 to give workers access to the site. In the 1970s, an oil pipeline was constructed from Amlwch, Anglesey to Stanlow, near Ellesmere Port. Crude oil was pumped ashore from tankers moored at deep-water pontoons. The pipeline closed in the early 1980s.
Thanga says: “Stanlow was a Shell refinery with a lot of heritage, not just in the construction but in the culture and health and safety. It is run by people who are very dedicated to the site.”
In 2010, Royal Dutch Shell declared its desire to sell off some refineries in Europe to concentrate on emerging markets in Asia and the Middle East. Shell said that a number of refineries in its portfolio offered over-capacity and consequently Stanlow, its last British refinery, was put up for sale. Stanlow was sold by Shell to Essar Energy for £814m.
Thanga recalls: “We bought the site in 2011 and have continued to hold the values that are very dear to the site but brought in entrepreneurship, which is a very good combination. We are ensuring the site’s integrity is maintained, bringing in the entrepreneurship that is always looking for value and opportunity, and increasing the capability of the refinery. It makes it very strong and sustainable.”
Discussing the difference of approaches between Shell and Essar, he says: “Shell’s approach was on things that give better returns. Where do I make my investment? Retail, refinery. Shell was using it as a supply and cost centre, not as a profit centre. Essar is an entrepreneurial company that looks at the add-ons and sees it as a profit site. We opened up the crudes. Previously it was just Shell, but now it’s whichever crude is economical. We have increased high-value products like jet fuel.”
Crude oil is now received on the Mersey at the Tranmere Oil Terminal, which is operated by the Mersey Docks and Harbour Company from its Liverpool headquarters, and is transferred via a 15-mile pipeline to storage at Stanlow. Output is delivered via various means, including the Manchester Ship Canal and a pipeline for jet fuel to Manchester Airport.
Thanga says: “Our location is critical: because it is between Manchester and Liverpool it caters to the consumer market. We can use the Manchester Ship Canal for smaller cargo and the river Mersey for bringing in bigger cargo. Although there are limitations, it balances because of the geography.
“Any airport needs jet fuel. The volumes are huge. To make sure operations are not affected, you need a very sure and connected supply. Most airports depend on direct supply because that way there is direct quality control to production point. There is no disruption. If it was coming by road it could get delayed. As airports becomes bigger, they need a foolproof supply.”
Stanlow is the third-largest refinery in the country and supplies 16 per cent of UK transport fuel; the majority of fuel for Manchester, Liverpool and Leeds comes from Stanlow. Thanga explains that its petrol, diesel, jet fuel and petrochemicals can be taken from the same oil, and that its diesel and jet fuel are most prized because they are in short supply but Essar can provide it.
“The chemical combination of the crude decides that it will have some amount of petrol and some amount of diesel inbuilt in the molecules. Any crude barrel will have all this but you pick what you want. We call diesel and jet middle distillates. They are important for the UK because the country is short of middle distillates. We import almost 10 million tonnes of jet fuel and similar quantities of diesel. The refinery is able to produce more middle distillates, almost 50 per cent of our production is middle distillates.”
In terms of international trade, Thanga says: “More than 80 per cent of our production is for inside the UK, 15 per cent of production is exported. Most of what we export is petrol, and almost all our production of diesel and jet is for the UK. We blend the oil in Europe and export it, mostly to countries such as Nigeria where there is a shortfall. Most of the products find a home in west Africa.”
Essar Global Fund Limited is an Indian conglomerate group in Mumbai, India. The global investment fund controls assets diversified across the core sectors of energy, metals and mining, infrastructure and services. Essar began as a construction company in 1969 and diversified into manufacturing, services and retail. Essar is managed by chairman Shashi Ruia and and vice chairman Ravi Ruia, his brother (Essar is said to come from “S.R”- Shashi and Ravi).
The company was incorporated in June 1976 under the name Essar Construction. In 1988, the company made an initial public offer for its shares, which are listed on the Bombay Stock Exchange, National Stock Exchange of India and two other Indian stock exchanges.
Thanga says: “When they see an opportunity they get in, they expand and bring in a more nimble system. Major organisations have to go multiple levels to implement anything or even discuss anything.
“There are a lot of opportunities. We have tanks, jetties and the road terminals that are being used exclusively for the refinery. But we have a lot of empty tanks capable of receiving products for third parties. So we are making them available. We have also started using the land for bringing in more companies. We can provide space and utilities for others.”
Essar has gone from being just supply to having 67 garage forecourts. This will rise to 85 by March, says Thanga. “We are always looking for people who can use our product or infrastructure. We are in talks with someone who wants to create jet from waste and another that supplies hydrogen.”
Skills is an issue, because oil refineries aren’t the most alluring environments. “It’s a big challenge,” says Thanga. “It is not glamorous and refineries are located in places without fast city life. There are no nice offices with computers. But there are always some people passionate about manufacturing or chemistry.”
An apprenticeship programme brings in 20 newcomers a year and a graduate programme. “We have been interacting with the community. We are part of the community,” says Thanga, who adds: “We would welcome any company that would like to set up shop in the region or in the refinery. They are very much welcome. We have a huge of patch of land where someone could put up renewable energy, like solar or wind. I’m sure we could consume some of the finished product.”
Source: Insider Media
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