Net profits at Essar Oil UK, which owns and operates the British refinery Stanlow, fell 4.2% in the year ended in March, because of major turnaround work that took place at the site from early January for much of the quarter and temporarily hit throughput.
Following the “complex and challenging” turnaround period, the company said it is on course to deliver margin improvements of $75 million to $80 million annually, and that it remained optimistic about its outlook for the U.K., its main market, as well as its recent initiatives to cater to export markets.
Essar Oil UK CEO S. Thangapandian said the company continued to grow its presence in the aviation sector — supplying jet fuel to major airports in the U.K., and with a 12% share of the overall market nationally — as well as expanding its retail business (it plans to have 400 outlets within the next five years). The focus on jet fuel would help the company withstand challenges in the automotive fuel market, including the renewed policy push in favour of electric cars in the U.K.During the year, the company also leased storage, blending and jetty infrastructure in Rotterdam to better enable it to directly supply export markets, such as Nigeria.
Per barrel margin rises
The company has invested more than $850 million into Stanlow since acquiring it from Shell in 2011, enabling it to raise its margin to $4 per barrel (bbl) above the benchmark from $1 in 2012.
Mr. Thangapandian said he believed the impact from Brexit would be positive for the firm, which was currently ‘bound by European guidelines’ that left manufacturing businesses such as Stanlow on the backfoot, he said. “We assume these differentiations which have existed will be removed when Brexit takes place”. He also played down the significance of the looming global trade war, pointing to the company’s focus on the UK market (which accounts for 80% of product sold), while much of the remainder was focussed on the European market.
