Petroplus’ refinery in Coryton is set to close as the administrators failed to find a buyer for Essex refinery, which supplies 20% of road fuels in London and the Southeast.
PriceWaterhouseCooper said the current economic environment, the challenge of raising $1bn (£625m) 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.
All work connected with the refinery turnaround programme has been suspended immediately, and there are likely to be a number of individuals impacted by this decision at both Swansea and Teesside, the administrator said.
It added that 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. Contractors will be provided with further clarity on their position in the next few days.
Administrators today (May 28) met with staff and contractors on site to explain the position, and will now consult with both the trade union and the established staff representative group. Contractors will also be invited to a series of briefing meetings.
Steven Pearson, joint administrator and partner with PwC, said: “Together with the PRML 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.
“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.
“I would like to thank the management, the employees, contractors, customers and suppliers for their support and solidarity during the past four months. Without their commitment we would not have been afforded the opportunity to continue the business and explore a going concern solution.”
Any closure process is likely to take up to three months, during which time discussions regarding a possible sale will continue.
UKPIA said it was saddened by the news from PriceWaterhouseCoopers that Coryton refinery may cease refining operations shortly with the consequent risk of loss of jobs and supply infrastructure. Chris Hunt, director general of UKPIA said: “UK and European refining is facing extremely challenging operating conditions and strong pressure on economic returns.”