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Crude Oil Supplies Head for UK Coryton Refinery

Source: Reuters 5/15/2012, Location: Europe

A tanker carrying crude oil is heading for Britain's Coryton refinery, trade sources and ship tracking data showed on Tuesday, just as a deal to keep the plant running after the collapse of its owner Petroplus expires.

It was not clear whether the shipment, due to reach the refinery on Tuesday afternoon, was under the expiring three-month deal to supply the plant, or part of a new arrangement to keep the refinery operating. "We are working on a number of options and in the interest of not destabilising anything we are not commenting at all," said Steven Pearson, a PwC administrator looking after the refinery.

Last month, Coryton's administrator said the fate of the refinery would be decided by mid-May when the current oil supply deal expired. The three-month deal will end at midnight on Wednesday, according to Richard Howitt, a British member of the European Parliament.

But no announcements are expected this week, according to a source familiar with the progress of the negotiations, who said any longer term solution would probably be disclosed in the next one to two weeks.

The crude oil delivery aboard the Neverland Angel, a Suezmax tanker that can load up to 1 million barrels of oil, could keep the refinery running for another 11 days.

Trade sources said the tanker loaded Saharan blend crude oil from Algeria, sailing from the port of Arzew last week.

Two traders said the cargo appeared to be owned by Morgan Stanley, but others said ownership was not clear because the vessel was under the control of a different oil trading firm, and details of the cargo buyer were confidential.

The expiring three-month deal to supply the plant was signed in February between Marcel Van Poecke, a co-founder of insolvent owner Petroplus, Morgan Stanley and investor KKR. Under the terms of the agreement, the group paid for its refining services, and retained ownership of the refined products. The industry source said it was possible the current arrangement may be rolled over, although the administrator has previously said this is unlikely.

MEP Howitt is calling for government intervention to save around 1,000 jobs at the refinery, which supplies fuels to London and South East England, and related employment. Swiss-based refiner Petroplus filed for insolvency in January after defaulting on $1.75 billion of debt.

Coryton is the most profitable of the five Petroplus refineries scattered across Europe. The plant was seen by analysts as the most attractive asset on offer, along with the Ingolstadt refinery in Germany. Against expectations, the first refinery sales instead involved less complex plants in Belgium and Switzerland.

Van Poecke's AtlasInvest teamed up with independent trader Vitol and purchased the Cressier refinery in Switzerland, while rival trader Gunvor picked up the Antwerp site. Private investor Gary Klesch has shown interest in Petroplus refining assets.

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