Wrong place, small size, ailing industry kill Welsh refinery

Mon Nov 10, 2014 10:39am EST
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* Europe's refiners face stiff competition from Asia, U.S.

* Did not have political role of Scotland's Grangemouth

By Simon Falush

LONDON, Nov 10 (Reuters) - U.S. company Murphy Oil tried for more than four years to sell its Milford Haven refinery in Wales. The plant was finally doomed last week when a deal with entrepreneur Gary Klesch fell through because he could not secure financing.

Banks were not convinced Klesch's plans to buy Britain's smallest and least sophisticated plant were viable, sources familiar with the transaction said.

The 135,000 barrel-per-day plant has already been shut and will be dismantled in coming months, putting most of its 450 staff out of work.

"It was at a smaller scale than other UK refineries, in a relatively remote location, and with a product slate skewed to gasoline at a time when Northwest Europe is surplus gasoline," said Stephen George, chief economist at KBC Advanced Technology.

The frail state of the European refining industry also means that all but the strongest plants are vulnerable.

Competition is increasing from the Middle East and United States, and industry executives say around 1 million bpd of capacity needs to close in the next few years to bring the market into balance.   Continued...