Essar Oil UK hits headlines again after city law firms quit

London (Quantum Commodity Intelligence) - Essar Oil UK, the owner of the 210,000 b/d Stanlow refinery in the UK, has been hit by the resignation of two blue-chip City law firms amid a deepening financial and corporate governance crisis at the company, according to Sky News.

Linklaters and Ashurst both recently quit as legal advisers, prior to Essar Oil UK asking Whitehall for talks about the refinery's future.

Essar Oil UK issued a statement on Monday to ward off speculation about the company's financial situation, pointing out it has no short term or long term bank debt on the company, other than working capital lines.

"Prior to Coronavirus, we were generating EBITDA in excess of $300 million per year.  We remain confident that we can manage through this period and come out stronger as the economy clearly continues to recover," the company said in a statement.

Data from the UK government showed the UK oil refinery production tumbled to 3.624 million mt in January, its lowest level since June, and down 461,000 mt, or 12%, from December.

"Production of key road fuels remains down," a statement from the Department of Business, Energy and Industrial Strategy said.

"Petrol (gasoline) and diesel production were down 21 and 13 per cent, respectively, in the three months to January compared to the same period in the previous year."

"Decreases in January put production at the lowest levels since August and June 2020 for petrol (gasoline) and diesel respectively, due to the stay at home message of the third national lockdown."

Before the crisis in January 2019, UK refinery production was 4.852 million mt, some 867,000 mt higher than January this year.

Last year, UK refinery production fell 10 million mt year-on-year to 45.2 million mt.