Essar oil in $350-mn deal for Shell's Stanlow refinery

Essar Oil, a unit of the mobile to shipping conglomerate owned by the billionaire Ruia brothers, has finally sealed a deal to acquire Royal Dutch Shell's Stanlow refinery in the UK for $350 million, The Economic Times today reported citing source close to the deal.

Under the deal that is likely to be announced early next month, Mumbai-based Essar Oil will pay $50 million on signing of the deal, another $100 million on closing of the deal and $100 million each in the next two years after closing the deal.

Shell, Europe's largest oil company and Essar have been in intermittent talks on closing the Stanlow deal since late 2009, but both companies had failed to arrive at a conclusion over disagreement on price.

Other suitors like Libya's National Oil Corporation, American refining giant Valero and an investment vehicle controlled by the Saudi royal family were also interested in Shell's Lazard-run auction for Stanlow. Since Essar was regarded as the only serious contender, it was told to come up with a firm bid by the end of February.

Stanlow, which occupies nearly 1,900 acres in Ellesmere, Cheshire, currently employs 1,000 full-time workers and 800 contractors on the site. The refinery has a production capacity of 272,000 barrels per day (bpd) - equivalent to around a sixth of the UK's transport fuel consumption.

Essar can ship crude oil refined from its Vadinar refinery in Gujarat to the Stanlow refinery from the Tranmere Oil Terminal on the River Mersey. Essar can also process additional crude from the North Sea and West Africa.