850 jobs at risk as oil refinery closes
Monday 28 May 2012
An oil refinery which went bust is to close after administrators failed to find a buyer or the cash needed to keep it going, putting around 850 jobs at risk.
The Coryton plant in Essex, which supplies 20% of fuel in London and the South East, was plunged into administration earlier this year by its Swiss owner Petroplus.
Administrators PwC said the site would be wound down over the next three months after the challenge of raising the £625 million needed to fund the refinery proved too much.
There are likely to be a "substantial" number of redundancies among the 500 workforce, PwC said, while around 350 contractors will learn their fate in the next few days.
There are seven other refineries in the UK - at South Killingholme and Lindsey, both in North Lincolnshire; Fawley, near Southampton; Grangemouth, near Falkirk; Stanlow in Cheshire; and Milford Haven and Pembroke, both in Pembrokeshire.
The other main supplier for the South East and London is the Exxon Mobil refinery at Fawley.
BP, a major customer of the Coryton refinery, said there were many alternative suppliers in the area, and added: "There will be no disruption to our customers."
PwC entered into an arrangement in February which allowed operations to continue at the Coryton refinery while various restructuring and sale options were explored. Some 20 million barrels of oil have been refined in that time.
The administrator said this was unachievable against a backdrop of an "over-supplied" European refinery market for both buyers and investors.
PwC said it will now consult with both the trade union and the established staff representative group over their future.
It also warned that the closure was likely to have an impact on staff at two other locations - an oil storage site in Teesside and a research and development site in Swansea.
Steven Pearson, joint administrator and partner with PwC, said: "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."
PwC said it would continue discussions regarding a possible sale over the three months it will take to close the plant.
Close to the M25, the 586-acre Coryton refinery was bought by Petroplus from BP for 1.4 billion US dollars (£714.6 million) in June 2007.
The site became operational in 1953 and produced petrol and diesel, including new "cleaner" fuels, aviation fuels, liquefied petroleum gas (LPG), fuel oils and bitumen.
The shutdown in January sparked fears of fuel shortages after the refinery halted all sales, before they were started again in February.
The refining market has come under pressure in recent years as operating expenses and the cost of crude oil surge at a greater rate than the value of the products.
A spokesman for the Department of Energy and Climate Change said: "It is disappointing that PwC has been unable to find a buyer for Coryton. This is particularly bad news for the workers at Coryton.
I want to reassure people that there will not be any impact on fuel supply from this development.
"Continuing jetty operations at Coryton means that there should be no loss of supply through the terminal to London and the South East."
Richard Howitt MEP said he had urged the Government to intervene "before it is too late" but said his appeal had "fallen on deaf ears".
He said: "The news is unexpected from a workforce who always believed they could succeed and flies in the face of everything we have worked hard to achieve."
Edmund King, AA president, said: "The tragedy is not only the loss of a refinery and jobs in an industry which produces some of the cheapest petrol in Europe but the question mark it raises with the UK's fuel supply resilience during bad winters and industrial action.
"The UK's fuel industry is extremely adept at shifting fuel supplies around the UK, but Coryton's loss makes that task more difficult."
Phil Whitehurst, GMB national lead officer for Engineering Construction, said: "This is a devastating blow for jobs in the local economy in Essex, for the UK energy sector and for the UK economy as a whole.
"This is yet another anarchical outcome adversely impacting on the UK's basic energy infrastructure arising from financial developments with their owners which are unrelated to UK needs."
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