By KONSTANTIN ROZHNOV
LONDON -- The permanent closure of Petroplus Coryton
refinery in England has become more likely after the plant's
administrator said Monday it has been unable to sell or
refinance it, but the UK government said any closure was
unlikely to result in fuel shortages.
"It hasn't yet been possible to find a solution which sees
the refinery continue as a going concern,"
PricewaterhouseCoopers, the administrator of Petroplus UK
subsidiaries, said in a statement, as the challenge of raising
$1 billion of funding for the refinery "ultimately proved
prohibitive in the face of an over supplied European refinery
market for both buyers and investors."
The refinery will be idled in a matter
of days, but preparations haven't started yet and the plant is
still operating at "pretty standard rates," said Steven
Pearson, a joint administrator and partner at PwC.
Before Petroplus lost access to all its credit lines and then
filed for insolvency in January, Coryton was supplying around
10% of the UKs fuel market.
Thanks to a tolling deal, the 220,000 bpd facility has been
the only one of Petroplus's five refineries that continued
operating, but that deal expired in the middle of May.
There has been interest "from the start" in turning the
Coryton refinery into a terminal, but it
wasn't a priority for the administrator to sell the plant as a
terminal, PwC's Pearson said.
The facility is likely to be sold as terminal due to its
good location, said Roy Jordan, downstream consultant at Facts
"There are likely to be a substantial number of redundancies
from within the 500 strong workforce over the next few months
if operations are wound down," PwC said.
Up to 500 contractors also dependent on refining at Coryton, according to
Richard Howitt, the Member of the European Parliament for the
East of England.
The UK Department of Energy and Climate Change said Monday
that the government had received a request from the Coryton
administrator to provide financial support, but decided that
keeping the facility open with public money isn't the best
solution for a long-term sustainable future for the plant.
"The difficulties faced by the administrator reflect
overcapacity in the European refining sector, indeed a number of
refineries have closed across Europe in recent years," a DECC
representative said. "With such overcapacity, it would simply
not be sustainable to prop up the refinery with taxpayers'
The government also said that the latest Coryton
developments won't affect fuel supply in the UK.
"There shouldn't be any shortages as there's so much spare
capacity and plenty of oil products," Jordan said.
Any closure process of the Coryton refinery will likely take up to
three months, during which time discussions regarding a
possible sale will continue, PwC said.
Dow Jones Newswires