Petrol shortage could hit south-east England

Quoted by Graeme Wearden and agencies guardian.co.uk, Tuesday 24 January 2012 11.03 GMT

UK's largest independent refinery halts supplies as owner files for bankrupcy while truckers at another supplier start seven-day strike.

The south-east of England faces the threat of a petrol shortage. Photograph: David Sillitoe for the Guardian.

The south-east of England is facing the threat of petrol shortages after the company that owns the UK's largest independent refiner said it would file for bankruptcy and truckers at another supplier began a seven-day strike.

The Coryton refinery, in Essex, stopped supplies after its parent company, the Swiss-based oil refiner Petroplus, said it was insolvent.

Late on Monday, Coryton told its customers that supplies had been halted with immediate effect – although administrators who took over the company said on Tuesday that they hope to keep the plant running.

Coryton supplies around 20% of fuel used across the south-east of England, including London, and energy analysts fear a prolonged shutdown could hit supplies in the region.

There are also concerns for the jobs of more than 1,000 people who work at the site, which processes up to 175,000 barrels of crude oil.

Petroplus made the move after failing to persuade creditors to extend deadlines for loan repayments.

The East of England MEP, Richard Howitt, said the firm's collapse could have a devastating effect on the local community and hit petrol stations in the area.

"Supplies across London and the south-east could be affected, and I have been told this could impact the Olympics," Howitt told BBC Radio 5 Live on Tuesday. Fuel consumption is expected to jump this summer when London hosts the Games.

PricewaterhouseCoopers took control of the Petroplus division which runs Coryton, and an oil storage operation on Teesside, on Tuesday morning. It said its immediate priority was to continue to operate the two sites "without disruption" while the company's financial situation was resolved.

News of the Coryton closure came as around 80 fuel tanker drivers at the Wincanton road haulage firm started a week-long walkout before dawn on Tuesday. The drivers, who are contracted to work for ConocoPhillips, are protesting about changes to their pay and working conditions.

Chris Kingshott, Wincanton's managing director for manufacturing, said the stoppage could affect petrol supplies.

"This strike, which we believe to be wholly unnecessary, could create significant disruption for road users and fuel retailers," he said.

Petroplus has debts of $1.75bn (£1.1bn) and was forced to seek insolvency protection after its lenders froze its credit lines, leaving it unable to access fresh borrowing. As well as Coryton, it operates refineries in Germany, France, Belgium and Switzerland.

Leaders at the Unite union said they were hopeful that the UK plant, which was sold by BP in 2007, could keep operating.

"One thousand jobs are at risk, but we firmly believe that joint action by the owners and government can help secure the business," the Unite national officer, Linda McCulloch, said. "We are in constant dialogue with Petroplus and their Swiss owners and the UK government about solutions to these developments."

The Petroplus chief executive, Jean-Paul Vettier, admitted that the company's collapse would have serious repercussions for its workforce and the communities in which it operates.

"We have worked hard to avoid this outcome, but were ultimately not able to come to an agreement with our lenders to resolve these issues given the very tight and difficult European credit and refining markets," he said.

Martyn Ward, commercial director of Palmer and Harvey, which supplies wholesale goods to UK garages, warned that Petroplus's collapse would hit "already struggling" independent petrol stations.

Notes …

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