London-listed Essar Energy today said it has completed the acquisition of UK's Stanlow oil refinery for $350 million.
Essar bought the refinery from Royal Dutch Shell, the company said in a press statement here.
The Stanlow refinery, near Ellesmere Port in the North-West of England, is the second-largest refinery in the UK, with a nameplate capacity of 296,000 barrels of oil a day. It supplies about one-sixth of the UK's petrol and is also a key manufacturer of diesel and aircraft fuel.
Essar Energy CEO Naresh Nayyar said Stanlow is "a high quality refinery and an excellent fit with our refining strategy".
"It takes us substantially closer to our objective of a global refining capacity of one million barrels daily. We look forward to making some operational improvements which will optimise production at Stanlow," he added.
The acquisition of the Stanlow refinery gives Essar Energy direct access to the UK market. It is also aligned with Essar Energy's strategy to provide options for the export of high value fuel products from its refinery at Vadinar, in Gujarat.
Vadinar currently has a capacity of 300,000 bpd, which will be raised to 375,000 bpd as part of Phase-I expansion plans, due to be completed by the end of this year, and to 405,000 bpd by September, 2012.
Essar Energy also owns a 50% stake in the Kenya Petroleum Refineries Ltd in Mombasa, Kenya, which has a nameplate capacity of 80,000 bpd.
"The consideration for the acquisition of Stanlow is payable to Shell in two installments," the statement said, adding that the first installment was paid on completion of the acquisition.
The second installment of $175 million, plus interest at the rate of LIBOR plus 4%, is payable on the date of the first anniversary of completion.
"A separate payment of $916 million has been made to Shell for the stock of crude oil, refined products and certain other inventory items on the Stanlow refinery site," it said.
The payment for stock was primarily funded from a working capital facility consisting of a three-year secured revolving credit facility for $1.5 billion, Essar added.
