Petrol prices likely to soar as oil refinery goes bust

Motorists are bracing for record fuel prices after London's biggest oil refinery went bust yesterday, putting about 1,000 jobs at risk.

The Coryton refinery on the Thames, which refines 175,000 barrels of crude a day, ceased deliveries of petrol, diesel and heating oil as PricewaterhouseCoopers was appointed administrator. PwC is trying to secure financing to rescue Coryton, which is owned by Switzerland's Petroplus and supplies about 600 BP and Texaco petrol stations in London and the South-east. This represents one-fifth of the 2,000 forecourts in the region and one-10th of the British total.

"By the end of the month, diesel will have hit a record high while petrol will be pushing up towards record levels as suppliers scrabble to bring in supplies from Europe," said Brian Madderson, chairman of RMI Petrol, which represents two-thirds of Britain's forecourts.

Diesel peaked last May at 143.04p a litre and is now at 142.21p. Petrol is 133.89p against a peak of 137.43p.

Richard Howitt, the East of England's MEP, said: "I don't want to be alarmist about this, but I don't want to be dishonest either. Supplies across London and the South-east could be affected and I have been told this could impact the Olympics." BP, one of Coryton's biggest customers, said it would urgently seek alternative suppliers for its forecourts, although it has reserves of petrol to last in the short term.

Coryton's future has been thrown into doubt after emergency talks with the creditors of Petroplus collapsed. The firm has been hit by falling demand, as consumers drive less to save money, and rising oil prices.

Simon Pearson, joint administrator and a PwC partner, said: "Our priority is to continue to operate the Coryton refinery and the Teesside storage business without disruption while the financial position is clarified and restructuring options are explored."