Stanlow oil refinery owner Essar Oil UK reports £52m half-year loss but shows strong signs of recovery after a turbulent two years when its survival was at stake. Tony McDonough reports
Oil giant Essar Oil UK (EOUK) says it has stablised its business after a two-year period when its survival was at stake.
EOUK operates the Stanlow oil refinery at Ellesmere Port, close to the River Mersey. It supplies around 16% of the UK’s total road fuels as well as aviation fuel for a number of airports including Liverpool and Manchester.
However, multiple lockdowns during the COVID pandemic sent demand for fuel plummeting. This put EOUK, which employs hundreds of people at Stanlow, under considerable financial strain.
It secured hundreds of millions of pounds in fresh financing. However, LBN reported in April 2022 that the business was seeking a further cash injection of around £230m.
This led its auditors to state that the uncertainty “may cast significant doubt on the company’s ability to continue as a going concern”.
In the last few days EOUK has now filed its latest set of accounts on Companies House. They cover the six-month period to March 31, 2022. EOUK is changing its fiscal calendar to align with other businesses in the group.
They reveal revenues of just over £4bn and a pre-tax loss of £52m. However, the company says post-pandemic demand for fuel has bounced back strongly and the report offers brighter news.
It said: “The management has prepared forecasts based on forward curves and available market imports and available funding solutions and concluded that the adequate financial resources will continue to be available to the group so as to be unable to continue to trade as a going concern.”
On current trading it added: “Almost 3.3m barrels of global refining capacity has closed since 2020… with new capacities coming online structurally there is no longer an immediate need for further rationalisation.
“The current market tightness caused by the response of global governments to the Russian invasion of Ukraine will support longer life to the refineries.”
EOUK currently employs more than 700 people. It has a 45.3% stake in the Kingsbury Terminal in Warwickshire, along with Shell, and has full control of another fuel terminal in Northampton.
The company has also entered into a joint venture with Vertex, in which it has a 90% stake, to build a plant at Stanlow that will produce up to 1GW of hydrogen a year from the mid to late 2020.
Hydrogen will be produced by burning natural gas. A second facility at the site will ‘capture’ the carbon emissions. It will then be stored in caverns underneath Liverpool Bay. Both projects are part of the £47bn HyNet hydrogen project.
Last year it announced it is to install the UK’s first refinery-based furnace capable of running on 100% hydrogen in a £45m investment. It says the furnace will become operational in 2022. It will replace three existing furnaces at the site which will be decommissioned.
And EOUK says Ellesmere Port will also be home to the largest biofuels storage hub in the UK. It will deliver 300,000 cubic metres of biofuels capacity with facilities at Stanlow in Ellesmere Port and the Tranmere Terminal in Birkenhead.
EOUK contributes to significant shipping activity on the Mersey and there are more than 700 vessels coming in and out of the Mersey every year. Supertankers berth at the Tranmere Oil Terminal next to the Cammell Laird shipyard and around 500 smaller vessels berth at Stanlow.