Petroplus Coryton refinery to close after failing to find buyer

28 May 2012 17:10  [Source: ICIS news]

LONDON (ICIS)--Petroplus will close its refinery at Coryton, in Essex, the UK, after the insolvent company failed to find a buyer, its administrator said on Monday.

PricewaterhouseCoopers (PwC) said the closure is likely to lead to a “substantial number of redundancies from within the 500 strong workforce over the next few months if operations are wound down”.

Work has been ongoing over the past four months to either sell the 220,000 bbl/day refinery as a going concern or to refinance its operations. Any closure process is likely to take up to three months, during which time discussions regarding a possible sale will continue, PwC added.

Switzerland-based Petroplus filed for insolvency in January after lenders froze about $1bn in credit lines in late December. The insolvency affected Petroplus’s five refineries in Europe, including the one in the UK.

In April, PwC said that the refinery in Coryton was at “real risk” of closure if a deal was not agreed by mid-May. PwC had said they needed about $1bn of new financing to continue operations at the refinery.

The administrators, which will now consult with both the trade union and the established staff representative group, said contractors will be provided with further clarity on their position in the next few days. All work connected with the refinery turnaround programme has been suspended immediately.

“The current economic environment, the challenge of raising $1bn of funding for the refinery, including the $150m capital expenditure 'turnaround' project ultimately proved prohibitive in the face of an over-supplied European refinery market for both buyers and investors,” PwC said.

“Together with the PRML [Petroplus Refining and Marketing Limited] management and the PRML creditors’ committee, we have worked tirelessly to explore all feasible options for the refinery. We have had contact with over 100 possible investors and purchasers. We have been unable to reach a deal to date,” said Steven Pearson, joint administrator and partner with PwC.

“The current financing market is exceptionally difficult – capital is short and expensive. Prospective investors in the refinery faced a significant capital expenditure need, as well as a fragile market for refined oil products. These factors have conspired against us in trying to structure a deal," he added.

($1 = €0.80)

By: Franco Capaldo
+44 (0)20 8652 3214

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