Coryton expected to sell for decent price despite parent company woes

Even with parent company Petroplus in bankruptcy, industry insiders expected Coryton to survive the fallout and be sold for a healthy price. The Coryton oil refinery had a reputation for efficiency and high technology but fell victim to the bureaucracy of bankruptcy enforcement and the better potential of other assets in the group

Unions were at loggerheads with management after it was announced the plant could be transformed into a storage facility as willing buyers were proving difficult to find. Administrator Price Waterhouse Cooper announced the deal with Greenergy, Vopak and Shell and said up to 900 positions would be made redundant.

With most of the workforce about to lose their livelihoods, PWC said that full negotiations would be started with the unions as soon as possible. A spokesperson said that unless a buyer was found for the refinery it was likely the plant would be wound down in the next few months.

The major block to a sale was the $150 million upgrade due later this year and meant more government support would be needed to smooth the way for any possible sale. In spite of the cost of the upgrade, an ability to produce high profit fuels was seen as an advantage compared to other plants in the Petroplus group.

But PWC administrator Steven Pearson points that it was the UK’s bankruptcy laws that proved to be the final stumbling block to any sale. Pearson explained that the laws were designed to protect creditors and that potential buyers of Coryton may have been put off by the parent company’s indebtedness.

The UK Government believes that a limit had been reached in capacity and that any additional support could be counterproductive to the industry. Other Petroplus refineries had not received any state support so it was hard to argue the UK operation should receive any more public money.