French court to decide fate of ex-Petroplus refinery Tuesday

Tue Oct 16, 2012 1:59am EDT

* Court in Rouen to hold hearing from 0800 GMT

* Industry doubts low-profile bidders' strength

* French govt hopes to avoid liquidation, job cuts

PARIS, Oct 16 (Reuters) - The fate of the former Petroplus refinery in northern France to be decided on Tuesday will not only be awaited by its 470 workers, but also by a French government anxious to avoid another plant closure as unemployment rises inexorably.

The commercial court in Rouen, northern France, is expected to give its verdict on two low-profile bidders willing to takeover the refinery, previously owned by the now insolvent Swiss firm, but could also decide to liquidate the plant or postpone its decision.

It has already prolonged its deliberations twice since the summer, saying it needed more information on the bidders.

Dubai-based NetOil, the unlisted group of Middle Eastern businessman Roger Tamraz, is seen as a favourite by trade unions, who have managed to keep the refinery going thanks to a temporary oil processing deal with former owner Shell.

"For us, there's only one possible buyer; NetOil. We're in contact with them every day, there's no reason for it to get stuck," trade unions spokesman Yvon Scornet told Reuters.

The other bidder, Alafandi Petroleum Group (APG), is a little-known player in the sector, which gives a Hong Kong address on its website and Ramzi Alafandi as its CEO. APG has not returned repeated requests for comments from Reuters.

Tamraz, who will defend his bid in Rouen, has pledged to invest 500 million euros ($646.80 million) into the refinery and said he had been in contact with a raft of French government officials, from the ministries of defence and industry, the customs or also the strategic oil reserves agency.

"The government is all over the place. But I'm impressed with the quality of the people working on the case," Tamraz told Reuters on Monday. "I think we've done our job. It has taken many months, but everything is on the table," he said.

Industry observers have expressed caution about the two bidders, however.

"When I see the names of these potential buyers, I'm not sure these offers are extremely serious," Patrick de la Chevardiere, CFO of French oil major Total told reporters on the sidelines of an event in London last month.

Francis Perrin, president of the Strategies et Politiques Energetiques group of publications, said it remained to be seen whether any of the bidders could operate over the long term a complex refinery in need of an upgrade.

"For the oil industry, it seems obvious that Alafandi Petroleum Group is not well known at all, so some scepticism seems justified," Perrin said.

"NetOil is not totally unknown in the oil sector however. But this is not a company which has renowned competences in the refining industry, that's where the shoe pinches," he added.

"TOUCHING WOOD"

France's new Socialist government and its high-profile industry minister Arnaud Montebourg have taken an active role in managing the situation as it tries to avoid a wave of factory closures after unemployment hit its highest level since 1999.

French refiners, in particular, have been struggling for years due to poor margins, weak demand and a surplus of gasoline capacity while the traditional market for French gasoline exports, the United States, has dried up.

However, a rise in refining margins since last April, helped by temporary cuts in capacity in Europe and the Caribbean, has helped alleviate the pain recently.

"I'm touching wood, but I must say that market conditions are in our favour at the moment," Tamraz said.

"I see access for oil coming from OPEC countries, they're really trying to push more and there's not enough buyers, therefore it's a buyer's market and you can find a better price," he added.

But others see the pick up in margins as only a temporary event, with petrol consumption declining in Europe as economic activity slows and consumers try to save on their gasoline bill.

"Frankly, we don't think it can continue over the long term. the impact of the economic crisis means the rosier outlook is unlikely to carry on after 2012," the head of oil industry lobby UFIP Jean-Louis Shilansky said.

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