Petroplus refinery set to close as no buyer emerges

London – The Petroplus Refining & Marketing Ltd (PRML) refinery operation in Coryton, UK looks set to close with the loss of hundreds of jobs, its joint administrators at PricewaterhouseCoopers (PwC) have announced.

The cost of keeping the operation running and over-supply in the European refinery sector have made the unit unattractive to potential buyers, explained PwC.

Since the administrators were appointed on 24 January, the operations at Coryton have continued and some 20 million barrels of oil have been refined.

Meanwhile, over the last four months the joint administrators explored various restructuring and sale options – either to sell the refinery as a going concern or to refinance its operations.

But, said PwC: “The challenge of raising £625 million of funding for the refinery, including the $150m capital expenditure turnaround project ultimately proved prohibitive.”

Work on the turnaround programme has now been suspended, and there was likely to be a large number of redundancies from within the 500 strong Coryton workforce over the next few months.

“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,” said Steven Pearson, joint administrator and partner with PwC.

“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.”

Adding a glimmer of hope though, PwC said any closure process would take up to three months, during which time discussions regarding a possible sale will continue.