Reuters: Bankruptcy News: Pumps to keep flowing despite Coryton closure

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Pumps to keep flowing despite Coryton closure May 29th 2012, 15:27 Tue May 29, 2012 11:27am EDT * Europe has over-supply of refining capacity * Local, national economy hit by loss of jobs LONDON May 29 (Reuters) - There will be little disruption to fuel supply as a result of the likely closure of the Coryton refinery in the UK, as a glut of refining capacity in the UK and elsewhere in Europe means petrol pumps won't run dry. Like the rest of Europe, Britain is well supplied with fuel, meaning that the full force of the blow will be concentrated on the region of Essex in the East of England where the plant is located. Coryton's owner, Petroplus, once Europe's largest independent refiner, filed for insolvency in December after it could not meet its debt obligations. Its administrator PricewaterhouseCoopers (PwC) said on Monday it had failed to find a buyer that could pay $1 billion for the site. According to FACTS Global Energy, total UK capacity without Coryton is around 1.78 million barrels per day. However refineries are only running at around 80 percent capacity on average, giving them plenty of scope to increase activity. Besides Coryton, there are seven operating refineries according to the UK Petroleum Industry Association, and what the UK doesn't produce for its own needs - it imports some diesel - it can easily import from neighbouring countries where there is also excess capacity. "There is still a large surplus of capacity in the rest of north west Europe so there is product availability there," Gemma Gouldsby at FACTS said. The UK exports gasoline and imports diesel, so the net effect of the closure will be to slightly increase shipments of diesel into the country while lowering outflows of gasoline. There may be some temporary tightness in the international gasoline market according to one trader, as Coryton was highly geared to gasoline production. However, with lowering demand in the United States, and more refining capacity on the East coast because plants which were slated for closure will now stay open, there is less call for European crude across the Atlantic anyway, meaning any change would be slight and short-lived, he said. Traders are also doubtful that a likely closure will have a lot of impact on the physical oil market. A diesel trader said increased supply from the United States and Europe will more than offset any draws by the UK to make up for the loss of Coryton. "The increase in supply we see next month - both local and from the U.S., encouraged by relatively stable margins - dwarfs the incremental increase in UK import demand that would result from the closure of Coryton," he said. Link this Share this Digg this Email Reprints

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