The future of Petroplus' UK refinery Coryton, which employs around 900
people, will be decided by the middle of May, when the current deal
supplying it with crude runs out, administrator PwC said on Tuesday.
Work on a potential sale or restructuring of the refinery's debt is
underway with a view to reaching an agreement before the deal expires in
the middle of May, or the plant will close. "We'll do a deal or shut
Coryton when the current arrangement finishes," Steven Pearson, partner
and joint administrator of Petroplus Refining & Marketing Limited
(PRML) told Reuters.
The plant received a three-month lifeline in February from a consortium
of Morgan Stanley, private equity firm KKR and the co-founder of the
stricken Petroplus Marcel Van Poecke. But with capital expenditure
needs of around $1 billion and upcoming maintenance costing $150 million
due in September, the economic conditions for securing a prompt deal
remain challenging. "One of the big factors here is that with the price
of oil being where it is at the moment, the cost of funding the working
capital is so enormous in the short term, that the economics are
difficult," Pearson said. "But that's true for any refiners out there."
Brent crude futures rose to highs not seen since 2008 of $128.40 a
barrel in early March, further squeezing refining profits. The tough
operating environment has taken its toll on the European industry, with a
mixture of thin profit margins and very tight credit conditions making
deal-making difficult. "We need committed investors to invest in the
turnaround programme, there's no point in asking if the sun will come
out tomorrow, we have to deal with it now," Pearson said.
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