Troubled oil refiner Petroplus Holdings AG, Europe’s largest independent oil refiner and owner of the Coryton oil refinery in Essex, is to file for insolvency, following a failure to reach agreement with creditors to extend loan repayment deadlines.
Fuel deliveries have been stopped from the Coryton refinery, which supplies about 20% of fuel for London and the South East. Coryton comes under the ownership of the Petroplus Holdings’ UK subsidiary, which has appointed PricewaterhouseCoopers (PwC) as administrators.
BP, which sold the Coryton refinery to Petroplus in 2007 for $1.4bn, and is one of its biggest customers, said: “ There are no immediate supply issues across our retail network. We are seeking clarification about the current situation at Petroplus and are monitoring the situation extremely closely.”
RMI Petrol chairman Brian Madderson said he didn’t know how long the stoppage would last, but he believed there may be efforts to re-open Coryton for deliveries. "At the moment the shortfall is being made up from imports and Esso’s Fawley refinery in Southampton. There are no reports of any service stations being out of stock, so there is no need for motorists to panic-buy.
"The concern is that the Coryton stoppage will have stark implications for fuel pricing, particularly on diesel. I had already warned about the likelhood of record diesel prices before this situation arose."
A statement from downstream oil industry association UKPIA said: "We await further information upon how this may impact operations at Coryton. UKPIA and its member companies will be working with the Department of Energy and Climate Change to try and ensure that any potential impacts upon supplies are minimised."
During the past few weeks, Petroplus has been negotiating with its lenders to reopen credit lines – which were frozen in December – needed to maintain operations and meet financial obligations. In addition, the company has been seeking to arrange alternative financing and liquidity facilities, as well as other strategic options.
However, the negotiations with the lenders have not been successful. Jean-Paul Vettier, Petroplus chief executive officer, said, “It is unfortunate to have reached the point where the Executive Committee and Board of Directors have to inform our employees, shareholders, bondholders and other stakeholders about these circumstances. We have worked hard to avoid this outcome, but were ultimately not able to come to an agreement with our lenders to resolve these issues given the very tight and difficult European credit and refining markets. We are fully aware of the impact that this will have on our workforce, their families and the communities where we have operated our businesses.”
Martyn Ward, commercial director, Palmer and Harvey, said: “The news Petrolplus is going into insolvency is a tragedy for those working for the company and another blow to the forecourt industry already in flux.
Oil might be seen as ‘just’ a commodity but it is essential to the running of the country – pretty much every sector of the economy is dependent on some way on it. There are serious questions to be asked around infrastructure protection – would it be appropriate to have a degree of protection around these fundamental operations? What happens if another refinery closes?
“As Petrolplus supplies 20 % of all petrol in London and the south-east, this cannot fail to hit already struggling independent petrol stations hard.”
“Palmer and Harvey’s Forecourt Report showed the UK has less than half the number of petrol stations it had 20 years ago, falling from 21,000 to 9,000. And that Essex had some of the worse fuel deserts in the UK, with the Maldon area of the county sharing one petrol station between 9,000 cars.”
The Coryton Refinery is located on a 586 acre site in Essex, on the Thames Estuary. The site was originally commissioned in 1953 by the Vacuum Oil Company, a subsidiary of Mobil, and was purchased by Petroplus in 2007. It is an integrated atmospheric-vacuum distillation, fluid catalytic cracking refinery with a total throughput capacity of 220,000 barrels per day.
Coryton has a crude oil throughput capacity of 175,000 barrels per day. The crude oil supply arrives at one of the five jetties located on site. Products are distributed primarily in the south east of England – both petrol and diesel, some is exported. The majority of output is sold to oil majors, resellers, industry and retail petrol stations. Products are shipped from the on-site truck-loading rack, oil product pipeline and marine facilities, enabling stable distribution into the local markets.