Essar Oil UK: Growing from strength to strength

Essar  Oil UK began its journey in the region with the acquisition of the ailing Stanlow refinery from Shell in 2011. Today, the company has not only turned around the refinery’s fortunes but also made substantial investments in developing a value chain that links refinery operations with an expanding retail outlet network and flourishing bulk sales.

When Essar entered the refinery operations business in the UK, it became the first ever Indian firm to own and operate a refinery in Europe. Now, five years into the acquisition, the refinery has posted a record net profit of $187 million due to a combination of factors; key among them being, optimising processes, diversifying the crude basket and investment in margin improvement programmes.

The refinery at Stanlow has become a key part of the Essar brand proposition, with large sections of the UK’s road, rail and air transport sectors relying on the quality, expertise and guarantee of supply provided by Stanlow. The refinery’s scale and complexity has put it at the forefront of supply to a huge section of the North West of England and North Wales, with product also going down pipelines to the Midlands and beyond.  It currently produces over 16% of the UK’s road transport fuel demand, including three billion litres of petrol, 4.4 billion litres of diesel and two billion litres of jet fuel per year.

These strides are helping steer the company’s financial performance and fuel multiple growth prospects. Essar Oil UK Executive Chairman, Naresh Nayyar, said,  “Stanlow is now performing strongly thanks to the significant investment provided by Essar, site optimisation to single train operation and the many additional margin improvements that have been introduced by the company over the past four years.  Looking forward, our major capex investment, robust cost savings programme and ambitious plans to grow a national UK retail network will deliver a truly sustainable and successful long term future for Essar Oil UK.” 

Retail ambitions

Retail was always a logical step planned for the UK, given the Essar Group’s extensive experience within the Indian retail market.  As one of only six refiners in the UK, Essar is able to leverage its manufacturing strengths to provide quality products at value prices direct from Stanlow refinery to dealers rather than through third parties. The company opened its first corporate branded site in the UK at Coalville in Leicestershire in November 2015 and has since added a further six service stations to its rapidly expanding portfolio. 

Building on the legacy of its Stanlow site, plans are afoot to develop a retail network on a scale that befits a UK refinery owner and ultimately a nationally recognised brand.  Significant volume growth, in the region of 20% to 150% seen at each of the branded sites has been hugely encouraging and in line with company expectations.  Awareness of the brand continues to grow and has been strengthened by the expansion of the Essar liveried tanker fleet with the recent addition of five new vehicles.

The new approach has seen fuel prices go down by a few pence for consumers and sales rise for dealers in Essar's newly-opened outlets. The retail foray is part of the company's overall plan to ensure a $100-million cash cushion for its refinery operations. The successful turnaround of the refinery gives the company a vantage position since most players source products from plants run by others or import.

Enthused by the initial response to the journey direct from the refinery to the fuel station’s forecourt, the company is setting ambitious targets. Essar Oil UK, Chief Commercial Officer, Retail, SB Prasad, adds,  “Extensive research and planning went into the launch to the UK market and those careful first steps have given us the solid platform on which to move forward rapidly.  In the next few months we hope to have about fifteen sites and by the end of this year we will maybe be looking at 100 locations.  Our goal is for Essar to be established as a nationally recognised brand and in a good position among the major current players who have been in the market for many years.  The response we have had so far, to what is the newest brand on the UK high street, has been hugely encouraging.”