London: Essar Energy has agreed to buy Royal Dutch Shell’s Stanlow refinery in northwest England for $350 million, in the latest Asian push into European refining, as western oil majors withdraw.
Essar, which has refineries in India, has said it wishes to establish a beachhead in Europe to help build a global oil trading platform.
Meanwhile, weak refining margins and falling European fuel demand is pushing Shell, and its rivals to sell refineries.
Stanlow is the UK’s second largest refinery. The agreed price tag was in line with previous expectations, although the total cost will amount to an estimated $1.3 billion including remaining oil inventories, Shell said.
The decision by Essar Energy, which has a majority stake in India-listed Essar Oil, followed Chinese oil giant PetroChina’s purchase of the Scottish Grangemouth refinery owned by INEOS.
“We will be investing in operational improvements to enhance production,” Essar said in a statement.
“Stanlow has been running at only about 225,000 barrels a day, which is 75% of its capacity of 296,000 bpd.”
Some of the European refineries on the market, including Total’s Lindsey refinery in the UK, have remained unsold.