3 Min Read
* Murphy Oil launches 45-day talks with 500 employees
* Company to contact potential new buyers
* Private equity fund Greybull was in advanced talks on a $500 mln deal (Recasts lead, adds quotes)
By Simon Falush and Ron Bousso
LONDON, April 3 (Reuters) - Murphy Oil told staff on Thursday it could be forced to close its loss-making Milford Haven refinery in Wales after exclusive talks with a private equity firm collapsed.
The Arkansas-based oil company' UK subsidiary Murco said it had started 45 days of consultation with employees and their representatives on the future of the loss-making 135,000 barrels per day refinery.
Low-profile private equity company Greybull had been in advanced stages of talks with Murco to buy the plant and associated assets for around $500 million. The deal was expected to be completed by mid-April.
"The deal we were trying to conclude didn't happen during the exclusivity period that we had extended to March 31," Tom McKinlay, Managing Director of Murco told Reuters.
"As a consequence, having missed several deadlines up to that point, we decided to allow that exclusivity to expire which allows us to talk to other people."
The plant employs 370 staff and between 100 and 150 contractors, McKinlay said, and Murphy Oil's UK subsidiary Murco also operates hundreds of filling stations around the country.
"For over three years, we have left no stone unturned in trying to find a buyer for the plant," Tom McKinlay, Managing Director of Murco, said.
He added that a possible outcome would be to turn the plant into a storage terminal should no viable buyer emerge.
European refiners have struggled with shrinking domestic demand and increased overseas competition which has crushed margins and led to periods of loss-making.
In the UK, the Coryton plant in the east of England closed down in 2012 after the collapse of owner Petroplus, while the PetroIneos owned Grangemouth in Scotland was brought to the brink of closure during a bitter industrial dispute last year.
Consultations will last 45 days, after which either a deal will be reached or Murphy will begin implementing a wind down of the plant, a source close to the talks said.
"Talks have been going on for three years and this has been a loss making business for a long time, multiple bids have failed," he said.
The possible closure of the Milford Haven refinery comes at the height of one of the biggest crises faced by Europe's refining industry.
Another 2 million bpd of capacity, more than 10 percent of Europe's total, is expected to shut over the next five years, analysts at Vienna-based JBC Energy said.
Milford Haven was the smallest and among the least complex of Britain's seven refineries in 2012, according to a report produced by Purvin & Gertz for the UK Petroleum Industry Association.
The refinery has undergone upgrades in recent years to increase its high-value diesel yield. The site also has deep water births that allow large tankers to be loaded and discharged. (Reporting by Simon Falush and Ron Bousso; editing by William Hardy)