Essar Energy completes acquisition of Stanlow refinery for US$350 million

India-focused integrated energy company, Essar Energy plc, announced that through its subsidiary, it has entered into an agreement to acquire Shell UK Ltd’s UK based Stanlow Refinery and other associated assets. The investment is for a consideration of US$350 million, approximately £219 million, in cash.

The Stanlow refinery is the second biggest in the UK and is expected to give Essar Energy direct access to the UK market. It is also aligned with Essar Energy’s strategy to provide options for the export of products from its high value refinery at Vadinar, in Gujarat state, India. In a statement, Essar Energy said it is acquiring the Stanlow Refinery at a competitive price when compared with other recent refinery transactions.

Naresh Nayyar, Essar Energy’s chief executive, noted that Stanlow is a high quality refinery and is an excellent fit with Essar Energy’s strategy. Nayyar said the firm looks forward to taking ownership of Stanlow in due course and making operational improvements which will enhance production and better optimize the facility.

A separate payment will be made for the crude oil, refined products and certain other inventory on the Stanlow Refinery site. This will be determined by prevailing market prices at the time when the transaction is completed and will be at cost, said Essar. The acquisition is expected to be completed during the second half of 2011.

Essar Energy is a world class, low-cost, integrated energy company with an established track record. Essar Energy, through its subsidiaries, owns one of India's largest private power producers with 1,600MW of installed capacity and projects under planning and construction to expand its capacity to 11,470 MW by the end of 2014.

Essar Energy also owns one of India's fastest growing private sector oil and gas companies with a diverse portfolio of exploration and production assets through its subsidiaries. The Vadinar refinery, located in Gujarat, is India's second largest private sector oil refinery with throughput capacity of 14 million metric tons per annum and plans to expand to 20mmtpa by September 2012.

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports & Logistics, Construction and Minerals. With operations in more than 20 countries across five continents, the Group employs 70,000 people, with revenues of US$15 billion in 2009.

30th March 2011