Record results for Essar

Major initiatives at Essar’s Stanlow refinery have seen a hydrocarbon margin improvement of +$3/bbl in the last four years, taking its margin to + $5/bbl compared to the North West Europe benchmark.  The refiner also entered the UK’s fuel retail market and has plans to grow its network to 400 sites over the next three years

Major initiatives at Essar’s Stanlow refinery have seen a hydrocarbon margin improvement of +$3/bbl in the last four years, taking its margin to + $5/bbl compared to the North West Europe benchmark. The refiner also entered the UK’s fuel retail market and has plans to grow its network to 400 sites over the next three years

Stanlow Refinery owner Essar Oil (UK) has announced its best ever financial results, for the year ending March 31st 2016.

  • During the year, Stanlow, which produces 16% of the UK’s transport fuel demand, processed 8.97 MMT of crude, a 5% increase on the previous year’s 8.54 MMT.
  • Gross revenues for the 12 months were $4,992 million, a 34% drop to the $7,615 million reported in FY15, primarily due to the lower crude oil price which fell 44% year-on-year average.
  • EBITDA was a record $359 million for the year, against the $177 million reported for FY15.
  • Profit after Tax (PAT) in the period grew to $244 million, against $70 million in FY15.

“This was a good year for the business, with the strong financial and operational performance (see below) reflecting the significant improvements made by Essar in optimising Stanlow since acquiring the refinery,” said chairman Naresh Nayyar.

March ending

FY16

FY15

Growth

Throughput (in MMT)

8.97

8.54

5%

Gross Revenue (in $m)

4,992

7,615

(34%)

CP GRM (in $/bbl)

9.3

8.3

12%

EBITDA (in $m)

359

177

103%

Profit after Tax (in $m)

244

70

249%

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.

During the year, long term working capital facilities were agreed.  These comprised a five-year agreement with J. Aron & Company for Inventory Monetisation and a three-year Receivables Securitisation facility with Lloyds Bank Plc.

“The market was supportive and our reliability and flexibility ensured we could capture opportunities.  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,” added Naresh.

Downstream integration

Essar Oil UK moved into downstream integration with a highly successful entry into the UK fuel retail market.  With seven sites already operational, the business has confirmed ambitious plans to grow its retail network within the UK market to 400 sites over the next three years.

The company also committed to a significant 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.

Essar has optimised Stanlow’s configuration to significantly improve the production of high value products, materially 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 $545m since acquisition in its capital investment programme.   

Project Tiger Cub and the additional works to be undertaken during the next major block turnaround, will drive a further $2/bbl in margin improvements, meaning Essar will have delivered a hydrocarbon margin improvement of +$5/bbl since acquisition.

www.essaroil.co.uk

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