Petroplus' Petit Couronne refinery to close by July without buyer

By Olivier Lejeune and Natalia Beales, London, 27 April 2012

The 162,000 b/d Petit Couronne refinery in Northwest France could shut permanently by July if no suitable buyer is found, a union leader said Friday. "We have enough to pay wages until July, but if no buyer is found by the end of that month, it will be all over," Yvon Scornet, a CGT representative at the refinery, told Platts.

Petroplus shut the refinery along with three other European sites in January after its creditors froze lending lines of more than $1 billion. A fifth site, the UK Coryton refinery, was also hit but has managed to remain online following a crude supply tolling deal. The Swiss company has been seeking a buyer for Petit Couronne ever,since, with at least three companies reported to be interested, but it has postponed the deadline for bid submission three times in the past two months.

It also announced in February a processing deal with Shell to enable the refinery to keep operating for a few months until a buyer was found. Under the deal, Shell would supply up to 100,000 b/d of crude to be refined at Petit Couronne for a maximum of six months, and it would propose the sale of refined products from the plant to Petroplus.

Maintenance work at the refinery has been launched to allow its restart at the end of May, Petroplus Raffinage Petit-Couronne said Friday. However, Yvon Scornet said the deal with Shell was likely to stop if the refinery incurred more than Eur25 million ($33 million) of losses. "Shell is not doing the processing deal to make money, but they have put a ceiling on their losses...maximum Eur25 million," said Scornet. "This will give us at least two more months to find a buyer," he added.

Scornet said the sale of the refinery had been complicated by Eur150-200 million of costs associated with the clean-up of the 130-hectare site, which has been polluted by more than 80 years of petroleum refining, when it will be permanently decommissioned.

"The buyers are not willing to be liable for the cleanup costs once the refinery stops operating...we think Shell [which operated the refinery for many years] should pay," he said. Scornet added that the French presidential election -- whose second round runoff is due next week -- and legislative elections in June -- had been another factor explaining the recent delays in closing the sale. "Some of [the people we have been dealing with] in the energy ministry may not even be there in two weeks," he said, adding that the CGT union had been in touch with the Socialists, which look likely to emerge as strong winners in both elections, according to the latest polls.

Bidding for the sale of the refinery has been extended for the third time to May 25, Petroplus Raffinage Petit-Couronne said. The original deadline of March 15 was extended initially to April 5 and then to April 30. "To date, three companies have maintained an interest but are not in a position to make a formal bid that is in line with legal requirements before April 30," Petroplus said, adding that "certain bidders have asked for the deadline to be postponed to May 25."

The additional time would provide the potential investors with "a better view of the institutional environment to come, with the objective pursued by the administrators remaining to secure the best chances for finding a buyer." Shell declined to comment for this story, while Petroplus Raffinage Petit-Couronne was not immediately available for comment.