February 20, 2011
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London-listed Essar Energy will own close to one per cent of the world’s oil refining capacity after acquiring Royal Dutch Shell’s Stanlow refinery in northwest England for USD 350 million. The acquisition of the UK’s second largest refinery will make the Ruias-promoted firm the first Indian refiner with truly global footprint.
The Royal Dutch Shell acquisition will join Essar’s other refineries at Vadinar in Gujarat, India, which can process 280,000 barrels of crude oil per day and a 90,000 bpd unit in Kenya. Essar is expanding Vadinar to 400,000 bpd (20 million tons). The UK operation at Stanlow has a total capacity of 296,000 bpd but currently operates at 220,000 bpd. Taken together this means that Essar now has a little less than one per cent of global oil refining capacity of 88 million bpd.
Essar’s acquisition came following Royal Dutch Shell making good progress in 2010, implementing strategy, improving near-term performance, delivering a new wave of production growth, and maturing the next generation of growth options for shareholders.
Shell focus on continuous improvement has seen reducing costs, enhancing Shell’s operating performance, and rebalancing the portfolio for profitable growth. Underlying costs declined by $2 billion in 2010 compared to 2009, bringing the total underlying cost reduction to some $4 billion for 2009 and 2010 combined, a reduction of some 10%.
Disposals of $7 billion of non-core assets in 2010 bring total asset sales in the last 5 years to some $30 billion.
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