Up to 850 jobs likely to be lost after administrators fail to find buyer for UK’s largest independent oil refinery
The UK’s largest independent oil refinery faces closure, with the loss of up to 850 jobs, after administrators failed to find a buyer for the Coryton site in Essex.
Petroplus, Coryton’s owner, went into administration this year as the increasingly cut-throat nature of the refining market took its toll. PricewaterhouseCoopers, administrator of the Petroplus UK business, said the challenge of raising £625m to sustain the refinery had proved “prohibitive” and a buyer had not been found. Coryton employs 500 people directly and 350 contractors.
Announcing that consultations are now taking place with trade unions over job losses, PwC said: “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.” It said a shutdown could take about 90 days and a multimillion-pound programme to overhaul the refinery had been suspended. “Any closure process is likely to take up to three months, during which time discussions regarding a possible sale will continue.”
If a buyer is not found soon Coryton is expected to stop refining activities shortly after 4 June. However, talks are continuing with bidders who are interested in converting the site into a storage terminal, reducing the impact on petrol supplies if on-site refining ends. .
Stephen Pearson, joint administrator of Petroplus, said talks had been held with more than 100 would-be investors and purchasers, but financing was in short supply for potential bidders. “The current financing market is exceptionally difficult,” he said. “Capital is short and expensive. Prospective investors in the refinery faced significant capital expenditure, as well as a fragile market for refined oil products. These factors have conspired against us in trying to structure a deal.” Petroplus owns a storage facility in Teesside, where negotiations are also under way to sell the site.
Coryton, close to Southend on the south coast of Essex, supplies around 20% of the fuel used across south-east England, including London, and news of its financial difficulties earlier in the year sparked fears of fuel shortages. However, the Department of Energy and Climate Change is adamant that Coryton’s fate will not affect petrol supplies in the UK’s most important economic region.
The department said: “We 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.” The department added that the workforce was highly skilled and “well-positioned” to get jobs elsewhere.
Richard Howitt, MEP for the East of England, said the news was “desperately bad” for the local economy. “Not all hope is lost because they will continue to pursue a sale during the redundancy process. But having failed to achieve that since January, that looks a very remote possibility.”
The owner of Britain’s second largest refinery, the Indian group Essar, warned in February that refinery closures are likely across the UK and Europe due to competition from the far east and Middle East. Essar’s chief executive, Naresh Nayyar, said refineries must be able to process fuels such as dense crude oil and maintain the requisite scale in order to keep costs per barrel at a profitable level.
Companies that did not fit that profile would struggle, Nayyar said. “Refineries that were small-sized or low-complexity are being replaced by large, complex refineries mostly built in the Asia-Pacific region,” he said.
Essar owns the Stanlow facility at Ellesmere Port, near Liverpool.