Petroplus faces challenging year as talks continue to secure loans

OPERATIONS at one of the UK’s biggest oil refineries, the Petroplus plant at Coryton near Stanford-le-Hope may be curtailed because of the impact of the credit crunch reports the Thurrock Enquirer.

At present the Swiss-based company that runs the plant, Europe’s largest independent refiner by capacity, is suffering after its credit rating was down-rated, meaning it is finding it difficult to raise the up front cash needed to buy crude oil for refining.

The Coryton site is still running and though the Enquirer understands some workers – notably contract workers – have been warned their jobs may be at risk, the site remains open and trading in its refined products.

At the weekend a huge tanker delivered the latest shipment of crude to the refinery, believed to be worth somewhere in the region of £40m.

However, the cost of buying in the raw material means the company has announced plans to make ‘temporary’ shutdowns at its sites at Petit Couronne in northern France, Antwerp in Belgium and and Cressier in Switzerland.

Petroplus Chief Executive Officer Jean-Paul Vettier was this week due to meet with French Industry Minister Eric Besson about the future of Petit Couronne and the company’s talks with European-based lenders.

Petroplus, which is based in Zug, Switzerland, and has a refinery in Germany as well as Coryton, France and Belgium, is experiencing difficulties in securing supplies after lenders froze uncommitted loans last week. Standard & Poor’s cut the company’s corporate credit rating last month, saying it may go bankrupt if an agreement with banks isn’t reached.

The Enquirer understands the company had the promise of more than $1bn in committed loans, but with the price of crude at a high, that may not keep the oil flowing in the UK for long unless the company can renegotiate its finances. Profits from processing crude into fuels such as gasoline and diesel in northwest Europe plunged to under 0.5p a litre in November, compared with 2p a litre in October, the International Energy Agency reported last month.

Lower profits from processing crude oil into fuels have forced refiners to cut costs and shut plants across Europe. In the last two years, LyondellBasell, Petroplus and Total have decided to stop refining at their French plants in Berre, Reichstett and Dunkirk on lower European demand.

Petroplus has made a statement from its Swiss HQ saying onging negotiations with banks were “open and constructive”, though the company has declined to comment on how its financial position will impact on Coryton, which Petroplus bought from BP in 2007 for a reported £714.6m.

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