News Post
Essar forms UK joint venture with Hydrodec Group to re-refine Stanlow oils
Essar Energy will form a venture with the UK’s Hydrodec Group to re-refine industrial oils, capturing higher profit margins from specialty products.
The companies agreed to re-process the oils at Essar Energy’s Stanlow refinery in northwest England, Hydrodec said Monday in a statement. They expect revenue of $150 million/year starting in 2016 when the new units will be fully operational.
Europe’s economic slowdown has led to overcapacity among oil processors and narrower refining margins, or the profit from turning a barrel of crude into products. Essar Energy, a unit of Mumbai-based Essar Group, is among companies studying new technologies to buoy earnings and curtail costs, and has already switched to cheaper gas from fuel oil to power units at Stanlow.
The companies will invest a combined $50 million in a facility to re-refine transformer oil and subsequently base oil, used in lubricants, according to Hydrodec. The first unit of the 130 million liters/year complex will be completed in 2014 and fed with used oil feedstock from the UK, the US and Europe.
The re-refining project combines Hydrodec’s proprietary technology with Stanlow’s “considerable operational and project execution expertise,” Volker Schultz, CEO for Essar Oil UK, said in the statement.
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