Closure looms for critical link in London’s oil supply
THE Essex oil refinery that also supplies around a fifth of the fuel requirements of London and the south-east is to close, after PwC yesterday announced that it had failed to find a buyer at the £625m price necessary to sustain the site.
However, concerns over London’s petrol supply as a result of the closure were met by government assurances that supplies were not under threat and that it would be business as usual on petrol station forecourts.
The Department of Energy and Climate Change said: “Continuing jetty operations at Coryton means that there should be no loss of supply through the terminal to London and the South East… There’s overcapacity in Europe, so as far as we’re concerned there will be no security of supply impact.”
Petroplus, the Swiss company which owns Coryton, filed for insolvency in December after it could not meet its debt obligations.
Coryton has been hit by lower margins in refining following the record highs reached in 2008. While margins have risen from their 15-year lows at the end of 2010, they have not recovered sufficiently to save the refinery. Overcapacity in the face of declining fuel demand in Europe has forced the sale or closure of a number of refineries across the industrialised world. The site currently employs 500 staff as well as 350 contractors. The administrator confirmed there would be “substantial” redundancies and that the business would be wound down over the next three months, although it could stop refining crude oil soon after the Jubilee weekend.
It added: “The current economic environment, the challenge of raising $1bn (£625m) of funding for the refinery, including the $150m capital expenditure turnaround project ultimately proved prohibitive in the face of an oversupplied European refinery market for both buyers and investors.”
Despite the investment required to keep the site competitive as a refinery, its good location and jetty services mean that talks are ongoing about converting it into an oil terminal for storage and distribution.