Coryton refinery gets lifeline from Petroplus founder

LONDON Wed Feb 15, 2012 3:21pm GMT

A general view shows the Coryton oil refinery in south-eastern England January 24, 2012. REUTERS/Stefan Wermuth

A general view shows the Coryton oil refinery in south-eastern England January 24, 2012.

Credit: Reuters/Stefan Wermuth

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LONDON (Reuters) - Coryton refinery will continue to operate for at least three more months after Marcel Van Poecke, a co-founder of insolvent owner Petroplus, teamed up with Morgan Stanley and investor KKR to provide fresh crude supplies.

Coryton is the most coveted asset of the five refineries owned by Petroplus around Europe, traders and analysts say. It has been running at half capacity since banks stopped financing Petroplus in late December.

PwC, the company's UK administrator, said on Wednesday it had signed a deal with Van Poecke's investment vehicle, AtlastInvest, Morgan Stanley Capital Group Inc and private equity investor KKR Asset Management LLC for temporary relief.

The group will provide crude to the plant, pay a fee for its refining services and retain ownership of the refined products, a PwC spokeswoman said.

"This is the breakthrough we have been praying for and ends the incredible pressure on the local workforce most of all, who never knew if each shipment would be the last," Richard Howitt, member of the European parliament for Essex where the plant is located, said in a statement.

"Although today is a good day, it is not the end. It buys time for the long-term solution which Coryton needs and deserves," he added.

Coryton is a major gasoline supplier in southeast England, and its closure would put as many as 1,000 jobs at risk, Howitt said.

"It's an important refinery for the local market. A lot of offers have been made to find a solution to maintain supply to the UK market," said Olivier Jakob from Zug-based consultancy Petromatrix.

"For now, it's a good financial play as the margins are relatively okay, and if you pay a throughput fee that is not too high," he added.

Nobody at AtlastInvest was immediately available to comment on the deal.

The plant has a Nelson complexity of 12.0, which means it can readily change its product mix depending on the available feedstock, and it had a benchmark refining margin of $6.54 a barrel in the first nine months of 2011.

"It's the best of the bunch," a European trader said.

Van Poecke's return signals that the sector can offer good returns even in the current tough operating environment of slack European demand and stiff competition from Asian refiners.

VAN POECKE AND PETROPLUS

Van Poecke, alongside Willem Willemstein, founded the company after a management buyout in 1993 and ran it to 2006. He left when refining was still in what is called a "golden age" of 2003 to 2008.

Petroplus went on to list on the Swiss exchange and expand to become Europe's largest independent refiner in a progressively ailing sector. Van Poecke, meanwhile, started his holding company, AtlasInvest, in 2007.

It now holds stakes in oil and gas operator Oranje-Nassau Energie, downstream market player North Sea Group, midstream oil company Hestya and market data provider Energy Intelligence.

His partner in the Coryton deal, Morgan Stanley, which trades crude and oil products globally, could help with the hedging related to the buying of crude feedstock and the selling of the refined products, which will limit risks, market players said.

The U.S. bank has shown a long-standing interest in Europe's refining sector, having reached a similar deal with Ineos Refining to supply crude oil and market refined products back in 2007.

Steven Pearson, joint administrator and partner at PwC, said in a statement the deal creates 'vital stability' for the refinery while a long-term solution is sought.

The plant has attracted widespread interest from suitors, including Russian and Asian energy players, and PwC is considering other long-term options such as a refinancing.

Petroplus filed for administration in several jurisdictions after defaulting on $1.75 billion of debt.

(Editing by Jane Baird)

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