Petroplus' UK plant to shut for work in Sept

Mon Apr 23, 2012 8:28am EDT

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* Maintenance work estimated at $150 mln

* Cost seen as important factor in sale process

By Zaida Espana and Emma Farge

LONDON/GENEVA, April 23 (Reuters) - The UK administrator for Petroplus' British refinery Coryton said on Monday the plant will shut for around 6-8 weeks from late September for major work expected to cost around $150 million.

The 175,000 barrel per day plant near London is on the market after its Swiss-based owner filed for insolvency in January, a victim of thin refining margins and high debt.

"This is a turnaround year at the refinery and there is a closure of the refinery at the end September for a six-week to two-month period," said Steven Pearson, joint administrator and partner at PwC told Reuters.

"The total cost of the turnaround programme is around $150 million, some of which have been funded over the last 100 days we've been in control," he added.

The expenses related to the planned maintenance are likely to be an important consideration for potential buyers of the plant. Administrator PwC said in February that Coryton requires about $1 billion of working capital, including capital expenditure needs and others.

"It's a stumbling block," said an oil industry source with a firm eyeing a Coryton purchase who asked not to be named.

Still, Coryton is seen as the most attractive remaining Petroplus asset because it can adapt its fuel production well to available feedstocks.

The plant had a benchmark refining margin of $6.54 a barrel in the first nine months of 2011. Richard Howitt, regional member of the European parliament (MEP) said that the plant has attracted dozens of enquiries.

Investors such as trading firm Vitol and private Swiss-based investor Gary Klesch are among parties that have so far expressed interest in the plant.

The UK plant is unique among the Petroplus assets as it has kept refining without a break after signing a crude supply deal penned with Morgan Stanley Capital Group Inc and private equity investors KKR Asset Management LLC and AtlastInvest in February.

Trading firm Gunvor, co-owned by a Russian tycoon, said it was acquiring the Petroplus Antwerp plant, but the remaining plants in the Petroplus fleet in Switzerland, Germany and France are still on the market.

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