Drivers are to face chronic fuel shortages and soaring petrol prices as the UK’s biggest refinery goes bankrupt

Motorists face chronic fuel shortages along with soaring Diesel prices and Petrol prices at the pumps after one of Britain’s biggest fuel refineries went bust, petrol retailers have warned.
Forecourt bosses and MPs said there was a risk of parts of the South East ‘grinding to a halt’ amid reports production had stopped at the Coryton refinery, which supplies around a fifth of the fuel in the region and 10 per cent of the UK’s supplies.
The closure of the giant Essex refinery also threatens to push up pump prices as supplies diminish.
The warning came as the refinery’s Swiss parent company Petroplus said talks with its lenders had broken down and it would be filing for insolvency with the loss of up to 1,000 UK jobs.

Petrol retailers warned Treasury minister Danny Alexander in a face-to-face meeting that the financial crisis at the Coryton refinery in Essex – one of the UK’s biggest suppliers of fuel – would cause chaos at the forecourts if it ceased production.
RMI Petrol chairman Brian Madderson said: ‘I told him the Government needed to be aware that the refinery was in a critical state. It’s amber alert. I asked him what were the contingency plans.’
With reserves at ‘an all time low’ Mr Madderson said: ‘The country could grind to a halt.’
He said that Mr Alexander told him the Government was keeping a watching brief on events and that he had been trying in vain to speak to the Department for Energy today.
‘After warning them last week I wanted to ask what contingency plans have been put in place,’ he said. ‘But they’re not returning my calls.’

Motoring misery: Petrol retailers have warned that the crisis could cause snaking queues and chaos on the forecourts as pumps run dry. Mr Howitt told BBC Radio 5 Live the refinery was being dragged down by its parent company.
He said half the jobs were well-paid, highly skilled positions, while the other half were contractors, many of whom have already received their redundancy notices.
He said: ‘One thousand job losses in Essex will have a devastating impact on the local economy.
‘I don’t want to be alarmist about this, but I don’t want to be dishonest either. Supplies across London and the South East could be affected and I have been told this could impact the Olympics.’
He said that the closure could lead to petrol shortages and called on the Government to prevent ‘devastating consequences’.
The MEP said: ‘The Government cannot continue to stand back from the devastating consequences of this crisis.
‘The Government has failed to heed our warnings and done nothing to protect the jobs in my constituency and must now recognise it has a duty to assure security of supply without further delay.’
Motorists are already on course for a 2p a litre fuel price hike at the pumps that could take diesel prices to a new record high, the AA has warned.

It is adding £4.25 a month to already hard-pressed family budgets and increasing the cost of a fill-up for ‘Mondeo Man’ by  £1.40.
The AA said drivers have already seen a 1p a litre rise over the last fortnight – with another 1p now  in the pipeline as wholesale prices rises work their way through to forecourts.
It said latest data from industry price trackers Experian Catalist  showed that the latest average pump prices for petrol are133.66p, compared to 128.14p a year ago , and 111.80p in mid January 2010.
Diesel prices are now averaging 142.07p a litre compared to 132.53p a year ago and 111.91p in mid January 2010.
Record  pump prices set on  9 May 2011 are 137.43p a litre for petrol and 143.04p for diesel.
Retailers told Treasury minister Danny Alexander that the fuel crisis could cause chaos on Britain’s forecourts

The AA today urged motorists to not to panic buy, which could drain petrol stations of their reserves and lead to queues on the forecourts.
There are only eight refineries in the UK – at Fawley near Southampton, Grangemouth, Stanlow, Milford Haven, Lindsey in north Lincolnshire, South Killingholme and Pembroke, as well as Coryton.
They may now be called upon to help make up the shortfall following the 586-acre Essex site’s closure.

The refining market has come under pressure in recent years as operating expenses and the cost of crude oil surge at a greater rate than the value of the products.
A survey carried out by energy consultancy Wood Mackenzie in 2010 showed that 29 of 96 refineries in the EU did not generate a positive net cash margin.
However, the market has become tougher as the economic downturn in Europe has hit demand for transport fuels and competition has grown from the refineries in Asia.
Petroplus reported a net loss of $413million (£265m) in the first nine months of last year, while in December its banks withdrew a $1.05bn (£675m) portion of its $2.01bn (£1.29bn) credit facility.

The other main supplier for the South East and London is the Exxon Mobil refinery in Fawley, near Southampton.
There is speculation that former owners BP might be asked to step in to help protect a strategic energy supply.
BP, a major customer of the Coryton refinery, said it had no immediate supply issues but it was ‘watching the situation very closely’.
The refinery was operating as usual today but no deliveries of petrol or other products, including bitumen, were leaving the site, according to union officials.

Russ Ball, regional officer of Unite, said lorries would be ‘stacking up’ and were not allowed to leave because of the insolvency arrangements.
‘Crude oil is still being produced and the refinery is operating, but nothing is going out of the gate,’ he said. ‘I am still confident because the refinery is viable and productive and hopefully we will know more in the next 24 hours.’
Petrol deliveries to garages and supplies of bitumen for road building and repairs will be affected ‘pretty soon’, he said.
Professional services firm PwC confirmed it was appointed as administrator to the UK arm of Petroplus, which includes the Coryton refinery, an oil storage site in Teesside and a research and development site in Swansea.
PwC said Petroplus had suffered as a result of ‘low refining margins and high restructuring costs’.

Steven Pearson, joint administrator and PwC partner, said: ‘Our immediate priority is to continue to operate the Coryton refinery and the Teesside storage business without disruption while the financial position is clarified and restructuring options are explored.
‘Over coming days we intend to commence discussions with a number of parties including customers, employees, the creditors and the Government to secure the future of the Coryton and Teesside sites.’

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