Essar Oil UK reports new financial arrangement of over $850 million

Logo of Essar Group (File image)

Essar Oil UK Limited (EOUK), which owns and operates the Stanlow Refinery, announced on May 21 that it has closed in on new financial arrangements of over US $850 million.

"This has allowed EOUK to replace its former credit facility as well as access additional capital, thereby strengthening its financial position," said a press release issued by the company.

The funding is made up of liquidity from a diversified range of sources, including bilateral arrangements with many of its key customers on enhanced payment terms and other long-term financings, linked primarily to crude supply, it said.

"With these financial arrangements now in place, EOUK has more low-cost liquidity to meet its upcoming requirements, and can continue to focus its energies on its transition to become a “Low Carbon Energy Provider” of the future," the release added.

EOUK is already working on delivering two blue hydrogen production hubs at Stanlow, which will attract £750 million in total investment, the company further stated.

"Follow-on capacity growth is planned to work towards the government’s new target of 5GW of low carbon hydrogen for power, transport, industry and homes," EOUK said.

Stanlow is committed to reaching 80 percent of the government-set targets, the statement noted, adding that the "EOUK remains committed to delivering the necessary operational cost reductions at the refinery over the course of the coming year in order to help secure its long-term future and to ensure it remains competitive in its traditional refining business".

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EOUK also announced that it has recently completed a review and update of its corporate governance, and its Board has adopted the recommendations arising out of that review process, which included "independent input from Ashurst LLP".

As a result of that process, the Board has committed to appointing two independent non-executive directors to the Board, the official statement noted.

Commenting on the recent developments, Essar Group Director Prashant Ruia said "securing this financing demonstrates the confidence all our stakeholders have in our long-term vision for Stanlow".

“We believe this confidence will be further bolstered by the updates we have made to our corporate governance, which includes a commitment to appoint two new independent non-executive directors to our Board," he added.

These appointments will further enhance our overall governance and risk assessment processes, as well as providing insights and strategic inputs to the business as it continues its transition to low carbon operations, Ruia said.

"With a strong economic recovery driven by the UK government’s roadmap out of the pandemic, I feel that our business has moved into a positive and progressive phase for the benefit of all of our stakeholders and employees. We look forward to furthering our investments in exciting new technologies, securing high-tech jobs and the Stanlow’s future at the heart of the UK’s green revolution," he further added.