Essar Oil UK buys BP stake in Stanlow assets
Essar Oil NSE -0.04 % UK has acquired BP’s stake in the pipeline and terminal assets connected to Stanlow Refinery to boost outbound logistics and enter new markets in the British Midlands.
Essar Oil UK has acquired 11.5% stake in UKOP pipeline, 45% stake in Kingsbury Terminal and the entire 100% stake in Northampton Terminal. The estimated value of this deal is around $150 million.
“Shell sold us the refinery, but we were dependant on others to evacuate the products. With this acquisition, we will be able to manage our evacuation much better,” S Thangapandian, chief executive officer, Essar Oil UK, told ET. “We get better access to the transportation fuel market and also get access to a new market for aviation fuel by entering the Birmingham airport.”
With this investment, Essar has now invested about $1 billion in its UK business since it acquired the Stanlow Manufacturing Complex in 2011. Essar will continue to look for opportunities to expand inorganically, aimed at long-term investments that are value accretive and complementary to Essar Oil UK’s growth plans, Thangapandian said.
Essar’s Stanlow unit meets about a sixth of the UK’s road transport fuel demand and this agreement will enable the company to improve competitiveness. Of the unit’s total production, 15% is aviation fuel, which thus far been mostly sold to other energy companies. This acquisition will help Essar Oil UK increase its share of aviation fuel sold directly to airlines.
“The acquisition will allow Essar to maintain presence in a very competitive UK Midlands region and grow that current footprint. In addition, we will continue to expand our retail offering – with a number of the 12 new stations we recently branded through an agreement with MPK being supplied from the two terminals,” Thangapandian said.
The company has already set up 67 retail fuel stations in the UK and has earlier stated that it aims to scale up to 400 in the next five years.
“We will continue to expand fuel retail business. Simultaneously, we will continue to look at opportunities to acquire depots and terminals that can help in evacuation of products from Stanlow and give us access to new markets,” said the CEO.
Essar Group, controlled by billionaire brothers Shashi and Ravi Ruia, owns and operates the Stanlow refinery located on the south side of the Mersey estuary near Liverpool.
Stanlow produces 3 billion litres of petrol, 4.4 billion litres of diesel and 2.1 billion litres of jet fuel per year. The group sold its Indian oil assets under Essar Oil, to Russian energy major Rosneft but is looking at the UK market for expansion.
The Economic Times 07-02-19