By INTI LANDAURO
Royal Dutch Shell has signed a contract to hire the French refinery owned by insolvent Swiss-based refiner Petroplus to process crude oil for six months, French President Nicolas Sarkozy said on Friday.
"This contract isn't a definite answer," Sarkozy said. "But without this contract, the refinery was over."
Industrial machinery like the refinery cannot stay idle for too long, he said during a trip to the facility, which is located in Petit-Couronne, a town on the French northern coast.
Resuming operations at the refinery, which was gradually shut down in January, requires 50 million investment, Sarkozy said.
Shell will transfer 20 million to the refinery in advance of future payments to the refinery. The government will finance the remaining 30 million, Sarkozy said.
Petroplus, one of the largest independent European refiners, was forced to file for insolvency in late January after struggling for months with weak demand due to the economic slowdown in Europe and overcapacity amid tighter credit conditions, high crude prices and competition from Asia and the Middle East.
French and German courts have appointed administrators to handle their units of Petroplus after the Swiss-based refiner filed for protection from creditors after running out of cash, the company said earlier Thursday.
A French prosecutor is investigating whether there was wrongdoing in the insolvency process.
Dow Jones Newswires