UPDATE: 1,000 jobs at risk as Coryton oil refinery in Essex halts sales

AROUND 1,000 jobs are under threat following the appointment of administrators at one of the UK’s largest oil refineries, amid warnings over possible fuel shortages.

The Coryton refinery in Essex, which supplies 20% of the fuel sold in London and the South East, halted supplies on Monday after the breakdown of talks between its Swiss-based owner Petroplus and the group’s lenders.

Refining operations at the plant, which can process 175,000 barrels of crude oil a day, are continuing as normal but it is unclear when supplies from the site might restart.

Accountancy firm PwC confirmed yesterday that it had been appointed as administrator to the UK arm of Petroplus, which includes the Coryton refinery, an oil storage site in Teesside and a research and development site in Swansea.

PwC said no redundancies had been made at this stage.

Steven Pearson, joint administrator, said: “Our immediate priority is to continue to operate the Coryton refinery and the Teesside storage business without disruption while the financial position is clarified and restructuring options are explored.

“Over coming days we intend to commence discussions with a number of parties including customers, employees, the creditors and the Government to secure the future of the Coryton and Teesside sites.”

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The Coryton plant was acquired by Petroplus in 2007 from BP, which remains its biggest customer. BP said it had no immediate supply issues but it was “watching the situation very closely”.

Russ Ball, regional officer of the Unite union, said he was confident the refinery was viable but warned that deliveries to filling stations could be affected ”pretty soon”.

However, a Department of Energy and Climate Change spokesman said: “We understand that a process is under way to put in place the necessary commercial arrangements to deliver product into the market.

“Companies have already made alternative arrangements to ensure adequate supply of products are available while these commercial arrangements are being put in place.”

Petroplus reported a net loss of 413million US dollars (�265million) in the first nine months of last year, while in December its banks withdrew a 1.05billion US dollar (�675million) portion of its 2.01billion US dollar (�1.29billion) credit facility.

Besides petrol and diesel, the site also produces aviation fuels, liquefied petroleum gas (LPG), fuel oils and bitumen.

A group of European parliamentarians including East of England MEP Richard Howitt have been meeting to discuss ways to save jobs at Petroplus, which also has facilities in France, Germany, Belgium and Switzerland.

Mr Howitt told BBC Radio 5 Live the refinery was being dragged down by its parent company.

He said half the jobs were well-paid, highly skilled positions, while the other half were contractors, many of whom have already received their redundancy notices.

He said: “One thousand job losses in Essex will have a devastating impact on the local economy.

“I don’t want to be alarmist about this, but I don’t want to be dishonest either. Supplies across London and the South East could be affected and I have been told this could impact the Olympics.”

The other main supplier for the South East and London is the Exxon Mobil refinery in Fawley, near Southampton.

There are also six other refineries in the UK, at South Killingholme and Lindsey, both in North Lincolnshire; Grangemouth, near Falkirk; Stanlow in Cheshire; and Milford Haven and Pembroke, both in Pembrokeshire.

The refining market has come under pressure in recent years as operating expenses and the cost of crude oil surge at a greater rate than the value of the products.

And the market has become tougher still as the economic downturn in Europe has hit demand for transport fuels and competition has grown from the refineries in Asia.