Essar completes £213m Stanlow deal

ESSAR Energy has completed its $350m (£213m) deal to buy the Stanlow oil refinery near Ellesmere Port in Cheshire from Anglo-Dutch oil giant Shell.

Stanlow is the second-largest oil refinery in the UK, with a capacity of refining 296,000 barrels of oil a day. It supplies around one-sixth of all the UK’s petrol, as well as a significant amount of diesel and aircraft fuel.

Essar Energy is a 42 year-old Indian-owned conglomerate with revenues of more than $1.5bn.

The company’s chief executive, Naresh Nayyar, said: “We are very pleased to have completed the acquisition of Stanlow, which is a high quality refinery and is an excellent fit with our refining strategy.

“It takes us substantially closer to our objective of a global refining capacity of one million barrels daily. We look forward to making some operational improvements which will optimise production at Stanlow.”

Essar said the deal also gives it direct access to the UK market.

The $350m price is payable to Shell in two instalments. The first, which has been paid on completion, was for $175 million less an adjustment to reflect certain costs associated with transferring the Stanlow refinery to Essar Energy’s subsidiary, Essar Oil UK Limited.

The second instalment, of $175 million plus interest at the rate of LIBOR plus 4%, is payable on the date of the first anniversary of completion.

A separate payment of $916 million has been made to Shell for the stock of crude oil, refined products and other inventory items on the Stanlow site.

Essar said payment for the stock has been funded by working capital from a $1.5bn, three-year revolving credit facility.

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