Shell agrees to sell Stanlow refinery for £219m

February 18th, 2011 Luke Mofflin Leave a comment Go to comments

Stanlow oil refinery 300

SHELL has today agreed in principle to sell its Stanlow refinery to Indian firm Essar Energy for £219m.

It secures the future of the UK’s second biggest refinery, which employs about 960 people at its Ellesmere Port site.

The agreement brings to an end 18 months of uncertainty after a sale of Stanlow was proposed in a group-wide review. Essar first entered exclusive negotiations in November, 2009, but the refinery’s value proved a stumbling block.

The two companies have now entered into an exclusivity agreement, lasting until April 1, with penalty clauses in place if the deal isn’t completed.

If Essar fails to proceed it will cost them £31m, with Shell liable for a break fee of £6m if it then pulls out.

Naresh Nayyar, Essar Energy’s chief executive, said: “We are very pleased to have reached an agreement regarding Stanlow, which is a high quality refinery in terms of its employees, its assets, its location and its customer base.

“Stanlow also fits very well with our strategy of providing options for the export of high quality products from our Vadinar refinery in India.

“After completion, we look forward to working closely with the refinery management and employees to develop the business and we will be investing in operational improvements to optimise the facility and enhance production.”

Essar will pay half of the money on completion of the deal and the balance, plus interest, one year later.

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