The Murco refinery at Milford Haven in South Wales is being closed following the collapse of a deal to sell it.

Its owner, Murphy Petroleum, said the agreement reached at the end of June to sell the refinery to Klesch Refining was no longer in effect.

In a statement the company said: “Despite every effort by Murphy to complete this sale process, conditions necessary for the sale were not able to be met. The parties are not engaged in further discussions.

“Murco has run this sale process for over four years, and has engaged with a large number of potential buyers of these assets. The company has now exhausted all options available for the sale of the site as a refinery, and is therefore left with no choice but to operate the site solely as a petroleum storage and distribution terminal.

“The refinery is currently in a period of shut-down and will be decommissioned while the company seeks a buyer for the terminal facility along with the three inland terminals. While the terminal facility will continue to employ personnel in Pembrokeshire, this will unfortunately still mean a significant number of redundancies.”

It added that the completed sale of Murco’s retail assets is separate and unaffected. MFG completed the purchase of Murco’s retail business on October 1 and managing director Jeremy Clarke said the collapse of the Klesch deal would have no implications for his company.

MFG runs 288 company sites and supplies a further 226 dealer sites. Clarke said: “We have security of supply and established contractual terms with Murphy Oil. Both MFG and Murphy had planned for this eventuality and MFG has been supplied under this arrangement for the past five weeks.”

Bryan Kelly, vice president of UK operations for Murphy Petroleum, said: “It is with great frustration and regret that we make this announcement. For the past four years we have worked tirelessly to secure a positive outcome for the future of the refinery and our workforce. Unfortunately, and despite every effort on the part of Murphy and our employees, we have been denied the desired outcome. While we know this is a difficult time, we are continuing to support employees as much as possible.

“I would like to thank all Murco staff for their continued professionalism and commitment during the sales process, as well as placing on record my appreciation for the efforts of the UK Government, and the Welsh Government and its Task Force.”