Stanlow Ellesmere Port
The 2,000-acre lies at the Ellesmere Port enterprise zone in Cheshire

Essar affirms Stanlow commitment amid funding woes

Sarah Townsend

The company has said it is fully committed to its operations at the Ellesmere Port oil refinery, including plans to decarbonise its activities and produce sustainable fuel there, despite reports that the company is nearing collapse.

Essar Oil UK, which bought the 2,000-acre Stanlow Oil Refinery at the Cheshire enterprise zone from Shell in 2011, has been in urgent discussions for weeks over efforts to stabilise its finances, Sky News reported on Friday.

Whitehall officials have reportedly been warned of the company’s declining financial position amid fears it might be close to collapse. Further talks are due to be held this week.

According to Sky News, several executives and advisors to Essar have recently resigned from the company, which is controlled by the India-headquartered Ruia family. If the company were to fall into administration, this could have serious implications for the UK’s fuel provision as the Stanlow site produces around one-sixth of the country’s transport fuels.

A spokesperson for Essar told Place North West: “Historically, Essar Oil UK has been a very profitable business that has attracted over US$1bn [£722m] in investment since its acquisition in 2011. It is a longstanding private company without public shareholders.

“The global Covid-19 pandemic has affected all refiners, with repeated lockdowns leading to reduced product demand and depressed refining margins.

“We have successfully traded through a very difficult 12 months and are now seeing increased demand for road transport fuels and improving refining margins, which has resulted in increased throughput at the Stanlow Manufacturing Complex.

“We are not a levered business and currently do not have any short-term or long-term bank debt on the company, other than working capital lines. Prior to Coronavirus, we were generating EBITDA in excess of $300 million per year. We remain confident that we can manage through this period and come out stronger as the economy clearly continues to recover.”

The statement added: “We are fully focused on supporting the customers and industries that rely on our products as lockdown restrictions are eased and are excited about our plans to decarbonise Stanlow and increase our supply of sustainable fuels, thereby supporting the UK’s green agenda.”

Essar acquired the refinery from Shell in 2011

Among Essar’s expansion plans at Stanlow are proposals to build a £600m facility to convert non-recyclable household waste into sustainable aviation fuel, in partnership with US-based Fulcrum BioEnergy. The project would use Fulcrum’s waste-to-fuel process, which is already being deployed at its facility outside Reno, Nevada.

The proposed Cheshire bio-refinery would be Fulcrum’s first outside the US and seek to convert several hundred thousand tonnes of pre-processed waste that would have otherwise been destined for incineration or landfill, into approximately 100 million litres of low carbon sustainable aviation fuel, known as SAF, annually. The scheme is awaiting planning permission.

Meanwhile, the first phase of the HyNet low carbon hydrogen production and carbon capture plant, a key part of the work being undertaken by the North West Hydrogen Alliance to develop a hydrogen economy in the region, has started to be built, on a 160-acre site owned by Essar close to the Stanlow refinery.

That project is part of a wider strategy to create the UK’s first net zero-carbon industrial cluster by 2040 in the region, known as the North West Energy & Hydrogen Cluster and spanning Cheshire, parts of North East Wales, Warrington, the Liverpool City Region and Greater Manchester.

The initiative is led by a consortium including Peel NRE, part of developer Peel Land & Property; clean energy firm Progressive Energy; the University of Chester; Cheshire & Warrington Local Enterprise Partnership; Mersey Dee Energy; North West Business Leadership Team, and the Liverpool City Region Growth Company. Companies including Essar are backing the consortium’s work.

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