Essar confident of concluding vital financial support deals
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The owner of the Stanlow oil refinery in Cheshire said it is confident of concluding a satisfactory financing deal to sustain the business.
Essar Oil UK, was reported to have been in talks with the Government and private equity firms over funding following a dramatic fall in its markets due to the coronavirus pandemic.
Demand for road and aviation fuels plummeted due to a series of lockdowns introduced by the Government, and the virtual cessation of the airline industry as countries around the world closed their borders.
However, Essar said today that it has successfully addressed the required financing issues and, after the disruption caused by the pandemic, is continuing with its plans to strengthen its balance sheet.
It is expecting to conclude a further financing by the end of June 2021, and, added that, based on the proposals it has received, is confident that this further financing will be concluded swiftly.
Essar also aims to achieve cost cuts during the year to further improve the position.
It said the refinery continues to operate as normal, with uninterrupted supply of products to meet the needs of its customers.
Demand for the refinery’s products continues to strengthen alongside the easing of lockdown restrictions in the UK.
The refinery is now generating positive EBITDA in the region of $40m for the second calendar quarter of 2021, which compares with a negative $18m in the corresponding quarter of 2020.
And, as restrictions continue to ease, the company said it will also benefit from the anticipated recovery in aviation fuel demand in the coming months.
A spokesperson said: “We are delighted to report on the positive developments at the refinery.
“We are grateful for the support we have received, and continue to receive, from our customers, suppliers and the Government through the last year.
“We look forward to continuing to serve our customers with high value products and progressing our post-carbon transformation plans.”
It is estimated that Stanlow produces 4.4bn litres of diesel, 3bn litres of petrol and 2bn litres of jet fuel each year.
In January this year Essar also announced plans to create a £750m hydrogen production plant at Stanlow, with Progressive Energy, developers of HyNet North West, an industrial decarbonisation cluster.
This was followed with news in February that Essar had joined forces with Fulcrum BioEnergy and Essar’s subsidiary company Stanlow Terminals, to create a new £600m facility which will convert non-recyclable household waste into sustainable aviation fuel (SAF) for use by airlines operating at UK airports.