OREANDA-NEWS. Essar Energy plc (LSE:ESSR), the India-focused integrated energy company, today released its Interim Management Statement (IMS) for the period ended 30 June 2013.

Q1 FY2014 highlights

Oil and Gas:

Vadinar Q1 current price gross refining margins (CP GRM*) averaged USD 7.01/bbl, up 49% from USD 4.69/bbl in Q1 FY2013

Vadinar Q1 throughput was 5.14 million metric tonnes (mmt)/36.34 million barrels (mn bbls), up 15% against 4.48mmt/32.65mn bbls in Q1 FY2013

Stanlow Q1 CP GRM at USD 4.86/bbl, compared with USD 7.53/bbl in Q1 FY2013, with margin improvement initiatives offset by lower industry margins

Stanlow Q1 throughput was 2.55mmt/19.27mn bbls, against 2.61mmt/19.65 mn bbls in Q1 FY2013

Q2 FY2014 refining margins in Asia and Europe trending higher than Q1 FY2014

USD 340 million of Essar Oil Rupee debt converted into dollars, taking total refinanced to USD 821 million. Refinancing process continues

Power:

Generation in Q1 totalled 3,114 million units (MU), up 60% from 1,945 MU in Q1 FY2013

Salaya I delivered a plant load factor of 59% against 22% in Q1 FY2013, while Vadinar P2 had a plant load factor of 86%

Availability of captive power plants between 91%-100%

Second Rupee power bond of c.USD 125 million (Rs.7.5 bn) issued, taking total to c.USD 230 million (Rs.13.79 bn), as part of planned total of c.USD 830 million (Rs.50 billion) to repay existing project debt, extend maturity dates and reduce costs

Refining and Marketing India

During the first quarter of FY2014, the Vadinar refinery achieved a throughput of 5.14mmt/36.34mn bbls compared with 4.48mmt/32.65mn bbls in the same period last year, an increase of 15%. This increase followed the completion of the Vadinar refinery optimisation project four months early in June 2012, which lifted capacity to 20mmt per year/405,000 barrels per day and brought the refinery’s major capex programme to an end.

Vadinar achieved a CP GRM of USD 7.01 /bbl for the quarter ended June 2013, compared with USD 4.69/bbl for the same quarter a year earlier, which illustrates the effect of the increase in complexity to 11.8 following completion of the refinery expansion and optimisation projects in March and June 2012, respectively. The benefit of higher complexity was partially offset by lower industry-wide margins during the quarter.

During the quarter, Vadinar’s crude mix comprised 92% lower cost heavy and ultra-heavy crudes, compared with 89% in the same quarter a year earlier. On the production side, the proportion of higher value middle and light distillates

Refining and Marketing UK

At the Stanlow refinery in the UK, throughput during Q1 FY2014 stood at 2.55mmt/19.27mn bbls, compared with 2.61mmt/19.65mn bbls in the same quarter the previous year, in line with expectations.

The Stanlow refinery achieved a CP GRM of USD 4.86/bbl for the first quarter FY2014, compared with a CP GRM of USD 7.53 in the same quarter of FY2013. CP GRM was impacted during the quarter by generally lower industry margins, weaker diesel and jet prices relative to gasoline, and higher residues production relating to the stabilisation of the revised refinery configuration following the closure of the lubes plant in February 2013.

The work underway to improve GRMs at Stanlow continues, with the new target announced with Essar Energy’s preliminary results in June 2013 of a USD 4/bbl uplift in margins by the end of FY2015 relative to the point at which Essar Energy acquired Stanlow in July 2011. At the end of June 2013, USD 2.3/bbl of this USD 4/bbl had been achieved. This work is important given continuing volatility in industry-wide European refining margins.

Preparations are at an advanced stage for a planned turnaround at Stanlow in H2 FY2014, allowing major maintenance projects to be completed, including a 25 year re-lifing of the residue catalytic cracking unit, the largest in Europe.