Shell Sells Stanlow Oil Refinery To Essar Energy
The oil giant Shell is to sell the second biggest oil refinery in Britain to the growing Indian energy company, Essar Energy.
Shell is set to offload its Stanlow oil refinery in Cheshire to Essar Energy in a deal estimated to be worth £700 million. The refinery produces around a sixth of the petrol in the UK and represents 15% of production from UK refineries.
The refinery in Ellesmere Port will be sold for £217 million and the contents of the refinery, i.e. the crude oil, refined products and other stock, will be sold separately for around £500 million.
The refinery employs around 960 workers, all of whom will be kept on after the sale and will also keep their final salary pension scheme.
Essar Energy plans to increase production at the refinery by investing in the plant to enable it to make petrol from “heavy” oil rather than the more expensive “sweet” oil. Production will increase from 220,000 barrels a day to 300,000 barrels. The chief executive of Essar Energy, Mr Naresh Nayyar, said the plant currently operates at around 75% of its total capacity.
Essar will use storage depots next to the refinery to store petrol sent from refineries currently under construction in India.
The general manager of the refinery, Frank Wilson, said “This deal serves Stanlow’s future well given Essar’s commitment to investment and intent to increase site throughputs. It can only benefit staff, business partners and the local community and region”.
Western oil multi-nationals are increasingly getting out of the refinery business because, they argue, of the low margins. Recently, PetroChina bought Grangemouth refinery in Scotland from Ineos, the chemical company and Total is also looking at selling off its Lindsey oil refinery.
The deal is set to be completed in the second half of this year.