UK Milford Haven refinery to close after sale falls through
05 November 2014
A deal to rescue the UK's Milford Haven oil refinery has collapsed, operator Murphy Oil Corp said late on November 4, forcing it to permanently close. This makes the plant the latest victim of a deep slump in the European refining industry.
Klesch Refining Ltd, run by Swiss billionaire Gary Klesch, had agreed to buy the idled plant in July, but the deal was contingent on a combination of government support and private financing from banks, which failed to be agreed by the deadline of October 31.
Murco Petroleum, a subsidiary of the US-based Murphy Oil, announced that the sale of the 135,000 barrels per day Milford Haven refinery, Britain's smallest, and related terminal assets has now been cancelled.
"The parties are not engaged in further discussions," Murco said in the statement. "The refinery is currently in a period of shut-down and will be decommissioned while the company seeks a buyer for the terminal facility along with the three inland terminals."
It said there would be a "significant number of redundancies". The source said that more than 300 of the 450 employees will be laid off, with the remainder staying on to operate the storage terminal.
Murphy has been trying for more than two years to sell the plant, which had been singled out as a candidate for closure as its location on the far west of the British Isles places it far from large demand centres.
Europe's ageing refining industry has been caught between declining demand, increased competition from state-of-the-art overseas operations and fierce new competition from US plants supplied with cheap shale oil, forcing a wave of closures.
Klesch bought another small refinery in Germany in 2010 and succeeded in turning it around, building a reputation as an austere operator who could succeed where bigger but less nimble oil majors fail.