Fears for 1,000 jobs at refinery

By Jamie Grierson
Published on Tuesday 24 January 2012 11:10

Around 1,000 jobs were at risk today after one of the largest oil refineries in the UK fell into administration and stoked fears over fuel supplies.

Coryton refinery in Essex – which supplies 20 per cent of fuel in London and the South East – halted sales yesterday and told its staff it was unsure when supplies would start again.

The shutdown at the former BP-owned refinery – with a total capacity of 175,000 barrels of crude oil per day – comes as Petroplus, its Zurich-based owner, said talks with its lenders had broken down and it had appointed a receiver to the UK refinery.

Linda McCulloch, national officer at the Unite trade union, said: “One thousand jobs are at risk but we firmly believe that joint action by the owners and the UK government can help secure the business.”

There are seven other refineries in the UK: at Grangemouth, near Falkirk; South Killingholme and Lindsey, both in North Lincolnshire; Fawley, near Southampton; Stanlow in Cheshire; and Milford Haven and Pembroke, both in Pembrokeshire.

Petroplus, which saw its credit rating downgraded by Standard & Poor’s earlier this month and suspended shares yesterday, said it would also file for insolvency. It previously owned a refinery in Teesside, which closed in 2009.

Close to the M25 motorway, the 586-acre Coryton refinery was bought by Petroplus from BP for $1.4 billion (£714.6 million) in June 2007.

The site became operational in 1953 and produces petrol and diesel, including new “cleaner” fuels, aviation fuels, liquefied petroleum gas (LPG), fuel oils and bitumen.

A group of European parliamentarians including East of England MEP Richard Howitt have been meeting to discuss ways to save jobs at Petroplus, which has facilities in France, Germany, Belgium, Switzerland and the UK.

Howitt told BBC Radio 5 Live the refinery was being dragged down by its parent company.

He said half the jobs were well-paid, highly skilled positions, while the other half were contractors, many of whom have already received their redundancy notices.

He said: “One thousand job losses in Essex will have a devastating impact on the local economy.

“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.”

Unite said it was in constant dialogue with Petroplus and the UK government about a potential solution to the developments.

McCulloch said: “It is vital that these negotiations are conducted in an atmosphere of calm to allow the best buyer to be found for the site.”

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 survey carried out by energy consultancy Wood Mackenzie in 2010 showed 29 of 96 refineries in the EU did not generate a positive net cash margin.

However, the market has become tougher as the economic downturn in Europe has hit demand for transport fuels and competition has grown from the refineries in Asia.

Petroplus reported a net loss of $413m in the first nine months of last year, while in December its banks withdrew a $1.05bn portion of its $2.01bn credit facility.

The other main supplier for the South East and London is the Exxon Mobil refinery in Fawley, near Southampton.

BP, a major customer of the Coryton refinery, said it had no immediate supply issues but it was “watching the situation very closely”.

A Department of Energy & Climate Change spokesman said: “The refinery remains operational.

“We understand that a process is under way to put in place the necessary commercial arrangements to deliver product into the market.

“Companies have already made alternative arrangements to ensure adequate supply of products are available while these commercial arrangements are being put in place.”

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Bosk Jeremy

Wednesday, January 25, 2012 at 01:21 PM

There are 30 per cent too many refineries for current needs. Something has to go. When that fuel depot blew up a couple of years ago and supplies were cut, much was made of the lack of a pipeline network to redistribute fuel from one part of the UK (or indeed, Europe), to another in case of emergencies. has anything been done? Of course not. That would require long term thinking and investment horizons beyond next week. Which is un-British in the extreme. It is the same with gas supplies. We are at the mercy of foreign suppliers who sell into the most profitable market. As happened after the Japanese tsunami and nuclear problems. Plans for gas storage are constantly knocked back by NIMBY politicians and the investors who would have to pay for it. It is a national need so a national government should fund it.

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Mr Super Bad

Tuesday, January 24, 2012 at 08:20 PM

1000 job losses is very bad news.

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Incandescent

Tuesday, January 24, 2012 at 03:33 PM

#2 LOL

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Tintock Pete

Tuesday, January 24, 2012 at 03:10 PM

Number of refineries in administration in the south east of England?---------------Number in Scotland?......The Answer. Not.

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Incandescent

Tuesday, January 24, 2012 at 12:03 PM

The ecomaniacs will be overjoyed.

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