Refinery Crunch In Europe
A few weeks ago we discussed the pressure the Greeks were under to source their energy needs from Iran since no one else would extend them credit. The European credit strain contagion now appears to be spreading rapidly as Europe's largest independent refiner by capacity, Petroplus Holdings AG, is suspending operations at three plants as banks freeze a $1bn revolving loan facility. S&P cut its rating from B to CCC+ citing a sharp deterioration in the firm's liquidity position. As a pure play refiner, meaning it needs to buy all of its crude supplies (on credit obviously) to feed its plants, it seems evident that both vendor- and bank-financing mechansims are starting to clog up very seriously if the largest independent refiner can't get credit. Bloomberg notes that refining margins are down considerably and we suspect that the closure of the Petroplus plants will help margins implicitly but as headlines show:
- *PETROPLUS SAYS TEMPORARY ECONOMIC SHUTDOWNS IN JAN. '12
- *PETROPLUS SAYS RESTART DEPENDS ON ECONOMIC CONDITIONS, CREDIT AVAILABLE
The full statement from Petroplus is here:
Petroplus Provides Update Regarding Its Revolving Credit Facility and Operations of the Petit Couronne, Antwerp and Cressier Refineries
ZUG, Switzerland--(BUSINESS WIRE)--Dec. 30, 2011-- Regulatory News:
Petroplus Holdings AG (SIX: PPHN) today announced that Petroplus held meetings with all lenders under the Revolving Credit Facility yesterday in Zurich. The discussions were open and constructive. Additional discussions between the lenders and the Company’s management will continue over the comings days in an effort to restore availability of credit facilities that ensure proper operations of its refineries.
In the meantime, the Company will start temporary economic shutdowns of the Petit Couronne, Antwerp and Cressier refineries in January 2012 given limited credit availability and the economic climate in Europe. The restart of the refineries is dependent on economic conditions and credit availability. The Company intends to provide further updates to the market as needed via press releases.
Petroplus Holdings AG is the largest independent refiner and wholesaler of petroleum products in Europe. Petroplus focuses on refining and currently owns and operates five refineries across Europe: the Coryton Refinery in the United Kingdom; the Antwerp Refinery in Belgium; the Petit Couronne Refinery in France; the Ingolstadt Refinery in Germany; and the Cressier Refinery in Switzerland. The refineries have a combined throughput capacity of approximately 667,000 barrels per day.