Essar Energy set to clinch deal for Shell's UK refinery

Essar Energy vice-chairman Prashant RuiaLondon-listed Essar Energy, controlled by the Ruias, expects to sign by the end of the month a deal to acquire Royal Dutch Shell's Stanlow refinery in northwest England and other associated assets for $350 million.

The company, announcing financial results for 2010 full year, yesterday said it is ''expecting to sign the deal to acquire Stanlow, the UK's second biggest refinery, from Shell over the next 10 days, by 31 March''.

In February, Essar Energy entered into an exclusivity agreement with Shell UK to buy the refinery for $350 million (Rs1,575 crore) in cash. Essar Energy has the option until 31 March to enter into an asset purchase agreement.

If by that time it decides not to proceed with the acquisition, it will have to pay Shell a break fee of $50 million.

In May last year, Essar Energy had raised $1.8 billion through an initial public offering, in a bid to fund the company's growth plans.

Meanwhile, Essar Energy said on Monday its profit after tax for the year ended 31 December 2010 stood at $248.3 million (around Rs1,117.35 crore) compared to $206.8 million (Rs930.6 crore) in 2009, up 20 per cent, as refining margins grew on the back of higher product prices. Gross refining margin (GRM) for the company's Wadinar refinery increased from $4.2 per barrel in FY 2009 to $6.6 per barrel in FY2010.