STANLOW’S oil refinery will benefit from more than £300m of investment under plans by new owner Essar Energy.

The India-focused energy group announced a £219m acquisition deal for the site from oil giant Shell last Tuesday.

When the Ellesmere Port plant’s oil stocks are included, the price is expected to increase to about £700m.

Essar outlined huge investment plans at a Press conference at The Chester Grosvenor and Spa.

Essar Energy vice chairman Prashant Ruia revealed significant investment plans to boost production capacity at the plant, which employs 960 staff.

“When we have put the sort of money Essar is doing here, we are clearly looking to invest and over the next two to three years we have a capital expenditure programme of more than $400m to $500m,” he said.

“We have some very clear ideas of the areas where that investment will need to go to increase the breadth of crude Shell is able to process and the scale it is able to process.

“We see a lot of potential in the Stanlow site, and we are looking at how we can benefit in volume size and crude.”

Both sides expect the takeover will be finalised by the second half of this year, and Essar Energy chief executive Naresh Nayyar said: “We look forward to taking ownership of Stanlow and making operational improvements which will enhance production, and better optimise the facility.”

Stanlow produces 225,000 barrels of oil a day – about 75% of capacity.

Essar intends to increase production to about 296,000 barrels per day.

It said Stanlow is more profitable than most refineries, even before its planned improvements.

“Its gross refining margins are about $2-$3 per barrel higher than the benchmark North West Europe margins,” said a spokesman for Essar.

“For example, Stanlow’s gross refining margin of $4.90 per barrel in the first half of 2010 compares with the benchmark $2.73.”

Stanlow produced earnings before interest tax, depreciation, goodwill and amortisation (Ebitda) of about £39m in the first half of 2010.

Essar also plans to use the plant to import product from its Vadinar refinery, in India.

“Stanlow gives us options to export from Vadinar to markets outside India, due to its tankage capacity and access to UK distribution pipelines,” it said.

Stanlow refinery general manager Frank Willsdon said: “This deal can only benefit staff, business partners and the local community and region.”