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Baseefa Ltd

Essar to mothball Stanlow refinery unit as margins plummet

18 February 2014

Essar Energy said it would mothball a small crude unit and start a $100 million cost improvement programme at UK's second-biggest oil refinery at Stanlow in Cheshire, which supplies about 15% of UK's transport fuel requirements. The small CD3 crude unit at Stanlow will shut by October, which should help reduce fuel oil and naphtha production and improve margins.

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Reuters said a major planned maintenance shutdown and a furnace incident last year at the Stanlow refinery, coupled with weak commodity prices, hit output and refining margins.
Throughput at the refinery is expected to be about 56 million barrels in the current financial year, down from the company's previous estimate of 59 million barrels.

Reuters reported Essar Energy saying that gross refining margins at Stanlow were a negative $2.61 per barrel during the third quarter, compared with $7.22 per barrel a year earlier.

A furnace at the refinery suffered damage in November during start-up at the end of a planned shutdown, resulting in increased production of low-margin intermediary products. The company said it expects to complete furnace repairs by the second quarter of financial year 2015.

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