Teesside refinery to suspend operations
Swiss group Petroplus is to halt operations at its Teesside refinery in response to poor trading conditions in the European refining sector, as well as the capital spending requirements at the North East facility. “Given the current unfavorable market
Zug, Switzerland – Swiss group Petroplus Holdings AG is to halt operations at its Teesside refinery in response to poor trading conditions in the European refining sector, as well as the capital spending requirements at the North East facility.
“Given the current unfavorable market environment and capital expenditures required to maintain refinery operations at Teesside, we have decided to suspend refinery operations, said Petroplus’s CEO Jean-Paul Vettier said. “The site will continue to operate as a terminal and storage facility.”
The Teesside refinery is located on a 40 hectare site on the northern coast of England. The site was built in 1966 and acquired by Petroplus in the year 2000 The refinery is focused on straight run distillation with a name plate capacity of 117,000 barrels per day. The unit has the capability to produce low sulfur diesel and supplies about 17% of all commercial diesel demand in the UK.
The Petroplus refinery in Teesside is a relatively simple refinery, compared to the companies more complex refineries Coryton, Ingolstadt, Cressier and BRC, which usually yield a higher margin as they have greater upgrading capacity. The refinery’s middle distillates are sold predominantly in the UK, with heavy and light distillates, including naphtha sold in domestic industrial regions as well as abroad for industrial use to various European refineries and chemical companies.
Through an agreement with a biodiesel additive producer, the refinery currently supplies the majority of the UK’s biodiesel blend, branded as Bio-plus. Bio-plus is a 95:5% blend of mineral oil diesel with methyl ester derived from renewable sources such as rapeseed, palm oil, soya or used cooking oil.
Meanwhile, Petroplus is also selling its Antwerp-based processing operations – Petroplus Refining Antwerp NV and Petroplus Refining Antwerp Bitumen NV – to Eurotank Belgium BV, part of the Vitol Group, for around $25 million. The sale is expected to close in the fourth quarter.
Commenting on the sale, Vettier said: “This sale will further allow the company to focus on our core refining business and results in a reduction in Petroplus’s sustaining capital expenditure of $55 million over the next four years. During the transition process, the company will continue to safely operate the facility and we are committed to a smooth transition with consideration for the welfare of all employees and with our strategic partners on the site. ”
The Petroplus announcements were made alongside quarterly financial statement showing net losses of $160 million for the three months ended September 2009. This included charges of $125 million to reduce the book value of the Teesside refinery and the Antwerp processing facility.
CFO Karyn Ovelmen said: “The European refining environment was particularly challenging in the third quarter with continued depressed refining margins, weaker crude oil differentials, increased cost of fuel consumed, maintenance activity at our BRC refinery and the impact of a major pipeline incident on Cressier and Reichstett refinery contributions.
Vettier, added: “Our refineries ran at reduced rates throughout the quarter reflecting the SPSE pipeline incident, the downtime at the BRC refinery, as well as the prevailing economic conditions. BRC was shutdown principally for economic reasons and we opportunistically extended the downtime to perform additional preventative maintenance. BRC is currently running consistent with plan.
“We also took advantage of the throughput reductions at Cressier and Reichstett due to the SPSE pipeline incident to perform additional maintenance and moved a majority of the Reichstett second quarter 2010 turnaround into the fourth quarter 2009. The Cressier refinery is currently running at planned throughput rates and the Reichstett refinery is expected to be operational at the beginning of December.”
The planned major maintenance turnaround at the Coryton refinery began in the last week of the third quarter and is due to be completed in early December. Planned energy savings initiatives and the major overhaul to the fluid catalytic cracker are expected provide for increased reliability and reduced fuel consumed in operations going forward.
Petroplus claims to be the largest independent refiner of petroleum products in Europe and currently has seven refineries across the region: the Coryton Refinery on the Thames Estuary in the UK, the Ingolstadt Refinery in Ingolstadt, Germany, the Belgium Refining Corp. Refinery in Antwerp, Belgium, the Petit Couronne Refinery in Petit Couronne, France, the Cressier Refinery in the canton of Neuchâtel, Switzerland, the Reichstett Refinery near Strasbourg, France and the Teesside Refinery in Teesside, UK. The refineries have a combined throughput capacity of approximately 864,000 barrels per day.