As One Of UK's Biggest Refineries Prepares For Shutdown, Drivers Concerned About Gas Price Spike

Tyler Durden's picture

Back in 2007, BP sold its Coryton refinery, one of the largest in the UK, to Swiss refiner PetroPlus for $1.4 billion. Fast forward 5 years later where we find that shortly after PetroPlus filed for bankruptcy, and was forced to proceed with a firesale of its assets, the European end demand market is so abysmal that a buyer could not be found for even a 30% off firesale. As Reuters reports, following a failure to sell Coryton for the low, low, price of $1 billion, the refinery, in dire need of CapEx investments, will be shutting down, and taking about 10% of UK refining capacity with it. "Insolvent Swiss refiner Petroplus' Coryton refinery in the UK is likely to close after its administrator PricewaterhouseCoopers (PwC) said on Monday that it had failed to find a buyer that could pay $1 billion for the site. Petroplus filed for insolvency in December after it could not meet its debt obligations. "The current economic environment, the challenge of raising $1 billion (£625 million) of funding for the refinery, including the $150 million capital expenditure 'turnaround' project ultimately proved prohibitive in the face of an over supplied European refinery market for both buyers and investors." The Coryton refinery has a capacity to process about 175,000 barrels of crude oil per day and additional 65,000 barrels per day of feedstock. Richard Howitt, the local member of the European Parliament said: "It's a bitter blow for the workforce...I think the process was flawed and that the government should have stepped in." It will be an even more bitter blow to the island nation's motorists who will suddenly find themselves facing with other spiking prices, a shortage of gasoline, or some combination of both.

As of January 2012:

Recall from January:

Motorists are facing the threat of fuel shortages and £100 fill-ups after one of Britain’s biggest refineries went bust yesterday.


As well as posing a serious risk to forecourt supplies, retailers say it could see petrol prices soaring to record highs as speculators and profiteers capitalise on the disruption.


Diesel prices in particular are set to rise by up to 3p to a record £1.45 a litre, they warn. That would mean more than £100 to fill up a typical family saloon with a 70-litre tank.


MPs and unions joined the chorus warning of shortages while forecourt bosses said there was a risk of parts of the South East ‘grinding to a halt’ after supplies from the giant Coryton refinery in Essex were suspended.

In other words, 10% of UK refining capacity is about to go dark.

Coryton supplies around 10 per cent of the UK’s petrol and diesel, and 20 per cent of the total in the South East. The warnings came as Coryton’s Swiss-parent company Petroplus filed for bankruptcy with the threat to up to 1,000 UK jobs at the former BP-owned refinery.


But energy ministers and oil industry bosses said they were doing their best to make up the shortfall from the UK’s seven remaining refineries and by buying in from abroad. A sudden rush to the pumps, however, could trigger filling stations running dry.

Naturally, even back then it was the speculators' fault.

Profiteers and speculators in the energy markets are already poised to capitalise on the problems to push up wholesale prices which will mean hefty increases at the pumps, say petrol retailers.


Even before the latest crisis, the AA had warned that motorists were on course for a 2p a litre fuel price hike at the pumps – adding £1.40 to the fill-up for a Ford Mondeo.


The Coryton crisis could see that rise even higher, say retailers.

And now that the crisis has morphed from hypothetical to fact, it will be up to the speculators to prove the scapegoaters right. Because the last thing the UK needs as the BOE contemplates launching even more QE is an actual supply driven spike in gas prices to make the chaos complete once excess liquidity is also thrown into the mix.

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LouisDega's picture

Long Huffy bikes. 

Ahmeexnal's picture

Insolvent Swiss.

That's a crystal clear sign of shit about to have a close encounter of the rotating type.

Ah well. I predicted Switzerland's collapse the day they closed down the Letten "stock" market.

francis_sawyer's picture

Time to float that sedan chair IPO...

slewie the pi-rat's picture

slewie don't take no puffy on no huffy

disclaimer:  long schwinnTripleLindy ETF [symbol: z-BiCh3]

schwinn at kmart  also target, wM, ?

with the strong dollar, maybe prices will stop the ol'  ^^^?

Harbanger's picture

Whad'ya do, give yourself a -1 ?  No one can vote with your italics.

Dr. Kenneth Noisewater's picture

So I wonder when Top Gear will get their chance to slag an Ampera or Volt?  One would think that power prices are an awful lot cheaper than petrol, plus no road tax!

Bringin It's picture

Top Gear should be about bicycles, instead of promoting the over consumption of increasingly scarce fossil hydro-carbons to fat and lazy types.

Nassim's picture

There is a surplus of refinery capacity in Europe - a huge suplus. That is why this refinery went bust. Simple.

The problem is with the oil-supply, not refineries. This article is really silly.

rtalcott's picture

wtf?  if you can't get a billion take less....this is bs...


moriarty's picture

agreed. Oh lord give me price discovery

DoChenRollingBearing's picture

There appears to refining overcapacity there as well as here in the USA.  Coryton might not even be worth 500 million, the article DID say the refinery needs major CapEx...

Manthong's picture

What octane is that liquidity and how many kpg can you get from it?

Tyler Durden's picture

As a commentator points out below, the biggest issue is not the asking price, but the ongoing maintenance requirements. It appears the refinery's asset base was so severly depleted, there is no IRR at any cost that makes sense.

For more, read:

rtalcott's picture problem with that...BUT why tf ask one billion...if it's only it what it is and be done with it.


slewie the pi-rat's picture

take it apart, float it south to greener pastures, and fix it?  possibly thru this program, or one like it?  all under new bankster ownership, too;  the old shell game...

import refined products, not crude thru the same venue?  i'm in!

Tanaka: EBRD to Invest €25 billion in Energy Efficiency Projects in 29 Countries, Libya is Welcome as Member The Managing Director for Energy Efficiency and Climate Change at the European Bank for Reconstruction and Development (EBRD), Josué Tanaka, said on 18 May that EBRD is willing to expand its operations to Libya as soon as Libyan authorities decide to apply for membership to EBRD as a country of operation.
slewie the pi-rat's picture


...speaking of towers of flaming unicorn fartz, check this out:

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In what is the first ever conviction of its kind anywhere in the world, the former US President and seven key members of his administration were on 11 May 2012 found guilty of war crimes.

Bush, Dick Cheney, Donald Rumsfeld and their legal advisers Alberto Gonzales, David Addington, William Haynes, Jay Bybee and John Yoo were tried in absentia in Malaysia.

slewie the pi-rat's picture

chew on this, republicunt lock-step BiCheZ!

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Bringin It's picture

I voted for Ralph all the time, but this time, Ron Paul is the no-war, liberty and freedom vote.

RP transcends the usual dichotomies, appears as honest as the day is long, has a great organization and is getting traction.

slewie the pi-rat's picture

you are smoking better shit than i am

the candidate must win the nomination or he doesn't get on the ballot.  try checking the delegate count;  i've put it up here so many times i don't care to, again

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nader has been and will be

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that's what they are there for!  so, tell santa, ok?  slewie ain't gonna be able to help you, son

Bringin It's picture

Slewie - I just down arrowed my own comment.  Rand Paul just married Mit Romney!!

greyghost's picture

did bain capital suck the life out this company too? romney must be proud of this business model!!!!! wonder if there is any pension monies floating around in the company???? if so get hold of romney and his buddies at bain capital...NOW!!!!! calling all vampires

Sandmann's picture

Not Bain but Riverside and Carlyle were the owners at one stage before offloading it in an IPO

Crab Cake's picture

So, GG. How much do you get paid for this drivel? Inquiring minds want to know. Is it by post? By hour? By word? Internship? Whats the fucking deal, really?

You smell like dead fish, and the illusory device that is th RD game is becoming ever so tired and stale. If you said this genuinely you are a fool, the other options get worse from there...

tonyw's picture

Also UK demand is down over 10% over the last four years and this refinery is about 10% of the UK total.

In the UK the annual car tax is based on the CO2 output which is broadly the same as fuel consumption so there is a good incentive to switch to more fuel efficient car.

For those who have a car funded by their company there is also a benefit tax again based on the CO2 output.

Going forward I would expect demand to continue to reduce over the next few years so why buy into a diminishing market??

hbjork1's picture

TD: First, thanks to all the TDs that have made ZH my first "go to" site when I sit down with a connection.

This note on target as usual.  Parts of the legacy refineries may be a half century old.  If they haven't been adding modernized units as they go along, section by section, they may as well start from scratch. The modern microprocesser and computer analysis have changed everything.  The changes are significant.  Component design, process design, control, product trace component utilization and quality as well as relative energy consumption.  New world.

However, investment capital can, little by little, take care of things like refinerys.  But the situation we have leading to things like the Corzine and Rubin "malfunctions" needs to be fixed because it educates a new generation about what can be "gotten away with"and how it is done.



CreativeDestructor's picture

off course, with all the QE next best return is to deplete all assets... next best return after that at any price is 0%... long live central planning, at least we can just work with handfull of numbers, 0% and 100,000%...

gojam's picture

Fact: For every £30 a Brit pays for petrol, £20 is tax/duty

drink or die's picture

Seriously, it's a government-caused crisis.  Although if the price were cheap, perhaps demand would spike? 

gojam's picture

The prices shown are close to my own experience. £1.33 per litre for unleaded of which 4p goes to retailer and 1p to supplier.

Petrol stations are noticing that customers are not filling up and only putting £5 or £10 in the tank.

Petrol inflation trickles though the economy, it's not just the cost of fuel but also the costs of goods due to transportation and farming

tonyw's picture

The average UK price for Petrol/gas today is GBP 1.35

GBP 1.35 x 1.57 (exchange rate) x 3.785 (litres to US gallons) = USD 8.02 per US gallon

nod2glod's picture

I love how we pay VAT on fuel duty. More that 50% of the VAT on fuel is due to the government adding value to fuel by putting on a >100% tax.

Hobbleknee's picture

But you get to be denied "free" healthcare.

LouisDega's picture

Bullish for Huffy bikes. I was one happy little fucker when i saw my Huffy thunder road under the Christmas tree back in the day. Thanks dad, Where ever you are.

holdbuysell's picture

As ZH has said before, the misallocation of capital continues, as more debt going to pay off debt or to pay dividends and not going toward improving the asset base is a road to disaster.

This is an excellent and timely example.

ivana's picture

all companies which are not verticaly integrated or have no upstream are destined to die soon ... have no future at all

EmileLargo's picture

Some of the pure physical commodity traders (like Glencore etc) will survive. They have few upstream assets but it doesn't matter. They operate in a different sphere. You are right that those that are structured like Petroplus will die out. 

Ident 7777 economy's picture




 ivana :

" all companies which are not vertically integrated or have no upstream are destined to die soon ... have no future at all "


Gee, um, er, isn't that monopolistic?


Kinda like what Rockefeller did with oil in the US (drilling, transportation, refining, retail)?


Wasn't the idea to get AWAY from that sort of thing?






Go Tribe's picture

Hardly. It's about how you manage the slate and not buying junk refiners of which there are many. A number of refiners not vertically integrated will continue doing fine. Just not in Europe or Latin America.

Caviar Emptor's picture

Greeks will choose to stay in the euro, opinion polls say Greece's pro-austerity party topped six opinion polls in a sign that the electorate is heeding warnings of a “catastrophe” if Athens crashes out of the euro.

Caviar Emptor's picture

And more of the same....

We shall B-b-b-b-b-b--baiL!

(Reuters) - Greece's bank support fund on Monday disbursed 18 billion euros to the country's four biggest banks as a part of a long-planned recapitalization effort, a fund official said.

Alpacanio's picture


Elwood P Suggins's picture

The UK gov - or any European gov for that matter - can easily lower fuel prices by cutting the ridiculous tax rate.  Have wondered for years why the Europeans put up with these taxes.

Fanakapan's picture

UK/Europe = Small Place (s) no distance to drive and get to see a Quack for Free :)

USA = Big place lotsa driving  and get to pay Bazillions to see a physician :(

tonyw's picture

Also the UK has a trade defecit so any increase in demand would worsen the trade defecit.

Whilst most would welcome lower fuel prices very few would want to pay higher taxes elsewhere or agree to less government spending.


Hobbleknee's picture

So you think 100% tax on gas, 25% VAT and 50% income tax = Free?

In Europe, you pay (more than your share) for health care no matter what.  In the US, you only pay if you use it.

blunderdog's picture

    In the US, you only pay if you use it.

Wha?  Don't be silly.

I don't use it much, but I pay for OTHER PEOPLE'S healthcare.

Fanakapan's picture

At point of delivery Free, and thats where it matters :)


As for not using it, even if one is fortunate, as most are, not to be part of the small minority with Congenital problems, there's no doubt that we All get to use medical services sooner or later :(

Sandmann's picture

So how do you get the fuel duty lowered ?  It is very easy to get Europeans to put up with it because they had WAR and RATIONING and SCARCITY. Britain had rationing until 1954

After the outbreak of World War II in September 1939 the first commodity to be controlled was petrol,

Rationing continued after the end of the war in 1945, although the basic petrol ration for civilians was restored when peace returned. Indeed, some aspects of rationing actually became stricter for some years after the war. Bread, which had been reduced in quality during the war but not formally controlled, was rationed from 1946 to 1948; potato rationing began in 1947.

Petrol rationing was briefly reintroduced in late 1956 during the Suez Crisis but ended again on 14 May 1957.[8] Advertising of petrol on the recently-introduced ITV was banned for a period


Once you live in a country where Rationing has been policy you have a completely different approach to price. It is cultural.

Even the US Military Personnel had ration cards in Germany for petrol so they did not buy too much as cheap US prices and re-sell on the Black 2008 !

GeneMarchbanks's picture

Yes, but it takes something like the Egyptians nationalizing the Suez to bring about the consciousness of fragility of this dependence. Americans have had no such experience recently plus the inflation tax is a slow numbing agent that helps mask horrendous policy.