The news was all over the place yesterday about ExxonMobil’s planned investment of $650 million to upgrade the largest crude refinery in the UK, Fawley.
The planned huge investment has taken a long time in coming for the American international oil giant which also operates in Nigeria but has not broached the topic of setting up an oil refinery in the country despite its huge fuel demand.
This investment will be the first in 30 years that the company will be making in Britain, say analysts at Zacks Investment Research, who also noted the reason given by the company for the investment, a desire to meet a mounting demand for premium fuels in Britain.
“Notably, in almost 30 years, ExxonMobil has never put in such a massive amount in the U.K. market,” the analysts observed.
“The investment decision, awaiting permission from ExxonMobil’s board of directors, reflects the company’s efforts to meet the mounting demand for premium fuels in Britain. The refinery upgrade will also lower the dependence on foreign diesel by Great Britain,” Zacks analysts wrote in a note in New York Wednesday.
The oil major said that in order to reduce Britain’s reliance on diesel imports, the 270,000 barrel per day refinery still needs a final investment decision which is not expected before the second quarter of next year. The planned upgrade would include building a new hydrotreater and a new hydrogen plant.
“If approved, the project, which is expected to involve an investment of hundreds of millions of pounds, will allow the site to process a wider selection of crude oils, and will help secure future employment for 1,000 employees at the site,” the oil major continued.
The UK has become a major importer of diesel in the last two decades as demand for the fuel grew relative to petrol.
The project is also believed to have the backing of ExxonMobil chief executive Darren Woods, who worked at the Fawley refinery early in his career, and has made investing in its global refining network, including plants in North West Europe, a priority for the company, despite weakening oil demand in the region.
Headquartered in Irving, Texas, ExxonMobil is the world’s best run integrated oil company. However, the stock has lost 3.9 percent in the past year, against the industry’s 8.1 percent rally, Zacks observed.