Based in the Liverpool city region the Essar Oil UK refinery supplies 16% of the UK’s road fuel but the company was hit by plummeting demand during lockdowns. Tony McDonough reports
Liverpool city region oil refinery business Essar Oil UK says it expects to secure a new financing deal by the end of June.
Last week it was reported the business, which employs almost 1,000 people on the banks of the River Mersey at Stanlow, was seeking more cash following a fall in demand during the COVID-19 pandemic due to multiple lockdowns.
Sky News reported the company had been speaking to the Government about a possible support package but the company later issued a statement saying it was in talks with “multiple finance providers”.
Last Friday Essar, which produces 16% of UK road transport fuels, issued a trading update indicating a significant improvement in its trading position as demand increases with the easing of lockdown.
The refinery is now generating positive EBITDA in the region of US$40 million for the second calendar quarter of 2021 (which compares to negative US$18 million in the corresponding quarter of 2020). The company will also benefit further from the anticipated recovery in aviation fuel demand in the coming months.
In a statement today, it said: “After the disruption caused by the pandemic, the company is continuing with its plans to strengthen its balance sheet, and is therefore expecting to conclude a further financing by the end of June 2021.
“The company is confident that this further financing will be concluded swiftly, based on the proposals it has received. The company will also deliver operational cost reduction initiatives during the year to further improve the position.”
A spokesperson added: “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.”
Since acquiring Stanlow in 2011, Essar has invested more than £700m in the Essar Oil UK business. The site’s largest ever turnaround in 2018 saw the successful delivery of a project that increased annual throughput capacity from 68m to 75m barrels, as well as improving yields and driving revenues.
Essar is a major supplier in the North West and beyond with customers including most of the major retail brands operated by international oil companies and supermarkets, Manchester Airport, leading commercial airlines and the region’s trains and buses.
It is also responsible for more than 700 ships coming in and out of the Mersey every year. Around 140 vessels, carrying up to 170,000 tonnes of crude oil in a single cargo arrive at Tranmere Oil Terminal each year. The oil is then pumped to Stanlow along an eight-mile pipeline.
Stanlow employs more than 900 people directly at the 2,000-acre site, as well as around 800 contractors. A further 5,000 people are employed in the wider supply chain.