Essar Energy will hand over the ownership of its crude oil and petroleum products at Stanlow, the second largest UK refinery, to Barclays to cut costs and pay off debts.

The new arrangements will enable Essar Oil UK to repay its existing working capital revolving credit facility, provided by 13 banks, Essar said.

The arrangements with the 296,000 barrel per day refinery take effect from Wednesday and will last for three years, Essar said.

"This transaction with Barclays is an important landmark step for Stanlow," said Volker Schultz, chief executive officer of Essar Oil UK.

"We have built a strong working relationship with Barclays, allowing us to continue delivering a high level of service to our customers, but in a much more efficient manner."