Essar Oil UK secures future with £ 600million credit facility
Operating a huge oil refinery and employing more than 900 people on the banks of the Mersey, Essar Oil UK has seen its revenues hit by COVID-19, but has now secured a lifeline in cash. Tony McDonough Reports
Liverpool-area oil refining company Essar Oil UK has secured a new credit facility worth over $ 850 million (£ 600 million) to consolidate its balance sheet.
In April, it was reported that the company, which employs nearly 1,000 people on the banks of the River Mersey in Stanlow, was looking for more money following a drop in demand during the COVID-19 pandemic in due to multiple lockouts.
This has led to speculation about the future of the company. However, Essar said in April that it was in talks with several financing providers over the refinance. Essar, which produces 16% of the fuels for road transport in the UK, also released a trade update indicating a significant improvement in its trade position as demand increases with the easing of the lockdown.
Today, the company says the new credit facility will replace the previous one and provide additional capital, thereby strengthening its financial position. Funding consists of cash from a diverse range of sources.
The company said these included bilateral agreements with many of its major customers on improved payment terms and other long-term finance, mostly related to the supply of crude oil.
With these financial arrangements now in place, Essar Oil UK has more low cost liquidity to meet its future needs, and can continue to focus its energies on its transition to becoming a ‘low carbon energy supplier’. from the future”.
It is already working on the delivery of two blue hydrogen production centers to Stanlow, which will attract £ 750million of total investment. Further capacity growth is planned to meet the government’s new target of 5 GW of low-carbon hydrogen for power, transportation, industry and homes.
Stanlow has pledged to meet 80% of the goals set by the government. In addition, Essar Oil UK remains committed to delivering the necessary operating cost reductions for the refinery over the coming year to help secure its long-term future and ensure its competitiveness in its traditional refining business. .
The company also recently completed a review and update of its corporate governance and its board of directors adopted the recommendations arising from this review process, which included independent input from Ashurst. Following this process, he committed to appointing two independent non-executive directors to the board.
Essar Oil UK Chairman Prashant Ruia said: “Obtaining this funding demonstrates the confidence of all of our stakeholders in our long-term vision for Stanlow. We believe that this confidence will be further strengthened by the updates we have made to our corporate governance.
“These appointments will further improve our overall governance and risk assessment processes, as well as provide strategic insight and input to the company as it continues its transition to low-carbon operations.
“With a strong economic recovery driven by the UK government’s roadmap to emerge from the pandemic, I believe our business has entered a positive and progressive phase for the benefit of all of our stakeholders and employees.
“We look forward to continuing to invest in exciting new technologies, securing high-tech jobs and the future of Stanlow at the heart of the UK’s green revolution.”
Since the acquisition of Stanlow in 2011, Essar has invested over £ 700 million in the Essar Oil UK business. The largest turnaround ever at the site in 2018 saw the successful delivery of a project that increased annual production capacity from 68 to 75 million barrels, as well as improved yields and revenue growth.
Essar is a major supplier to the North West and beyond with customers including most of the major retail brands operated by international oil companies and supermarkets, Manchester Airport, major commercial airlines and trains and area bus.
He is also responsible for over 700 ships entering and leaving the Mersey each year. About 140 ships, carrying up to 170,000 tonnes of crude oil in a single shipment, arrive at the Tranmere oil terminal each year. The oil is then pumped to Stanlow along an eight-mile pipeline.
Stanlow employs more than 900 people directly on the 2,000-acre site, as well as approximately 800 contractors. 5,000 more people are employed in the wider supply chain.
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