Petroplus, one of the largest refineries in the UK, has filed for bankruptcy, with output being suspended immediately from the site.
The firm own the Essex Coryton refinery and experts have warned that its withdrawal from the market could mean not only escalating costs for fuel, but also shortages in the south east of England. Union bosses as well as MPs echoed the view, describing how the region could be brought ‘grinding to a halt’ by the closure.
All output has ceased with immediate effect from the Coryton refinery, with no diesel, petrol or bitumen, as well as other products being dispatched from the depot following the announcement. The administrators appointed to act for the firm, PricewaterhouseCoopers, said that production was continuing internally, but supplies were being stockpiled rather than sent to customers. The company were unable to confirm when, or if, deliveries would be able to resume but confirmed they were in discussions.
The Cortyon refinery was previously owned by BP but passed to Swiss company, Petroplus and provided around a tenth of the UK’s petrol and diesel supplies. In the south east, it was even more essential, with around a fifth of the area’s fuel arriving from the refinery.
The energy company have been struggling for some time and growing increasingly reliant on the revenue from the UK arm of the operation. By the end of December 2009, Petroplus owed the British arm of the business £42 million. During 2010 its fortunes worsened, reporting a net loss of £265 million and its fate was more or less sealed in December, when banks retracted £675 million of the £1.29 billion credit facility it held. By the end of 2010, the British operation was owed more than £114 million from the group. The final nail in the coffin was when a $1 billion loan, supplied by a number of financial backers including Deutsche Bank, BNP Paribas and Morgan Stanley, which was enabling it to keep trading, was suspended.
Steven Pearson, a partner at PwC and one of the administrators responsible for Petroplus, said that their ‘immediate priority’ was to keep the Coryton refinery in operation ‘without disruption.’ He added that the group were exploring all possible restructuring options and were attempting to clarify the exact financial position of the debt-stricken firm.
The move to file for bankruptcy puts around 1,000 jobs at risk of redundancy at the Essex refinery and ministers have said that the government is working hard to try and find a new owner for the site.
But whilst workers at the plant worry about their jobs, motorists could start feeling the pain at the pumps, with profiteers in the region ready to make the most of any supply shortage.
Richard Howitt, the MEP for the East of England, warned that deliveries of fuel to both London and the rest of the south east could be ‘affected’ and said there could also be a knock-effect for the Olympics. However, Adrian Tink, RAC Motoring Strategist, said that panic buying would simply exacerbate the problem and urged drivers in the area to refrain from stocking up on fuel.
Britain has 8,500 pumps, of which 2,132 are in the south east. A spokesperson for the Department of Energy and Climate Change, said that firms had been able to make ‘alternative arrangements’ to ensure there was no interruption to filling stations previously supplied by the Coryton refinery.