Feb 15, 2012:

British refinery Coryton will continue to operate for at least three more months after PwC, the local administrator for insolvent refiner Petroplus , secured a deal to ensure continued crude oil deliveries.    Under the agreement, Morgan Stanley Capital Group Inc  and private equity investors KKR Asset  management LLC and AtlastInvest will provide crude to the refinery and pay a fee for its services, a spokeswoman for PwC said. The three will then take ownership of the refined products. "This arrangement allows the refinery to continue to operate as usual whilst the feasibility of a ermanent solution for the refinery is explored," PwC said in a statement.  The deal is a temporary solution that will run for an initial three months, allowing the plant to continue to operate and avoiding a costly shutdown. Coryton is the most coveted asset of the five European plants owned by Switzerland-based refiner Petroplus, analysts and traders have said.   It has a Nelson complexity of 12.0, indicating it can readily change its product mix depending on the available feedstock, and it had a benchmark refining margin of $6.54 a barrel in the first nine months of 2011.  Steven Pearson, joint administrator and partner at PwC, said the deal creates 'vital stability' for the refinery while a long-term solution is sought.       

OUTLOOK FOR CORYTON         

Petroplus, Europe's largest independent refiner by capacity, filed for administration in several jurisdictions after defaulting on $1.75 billion of debt.   Europe's refining sector has suffered from a combination of oversupply and weak margins, which in the case of Petroplus was compounded by a highly leveraged debt structure. The deal is significant in the sector as it involves a large U.S. bank  longside two private equity investors. Morgan Stanley has shown a long-standing interest in Europe's refining sector, having reached a similar deal with Ineos Refining to supply crude oil and market refined

products back in 2007. PwC said it would continue to work with Morgan Stanley, KKR and AtlasInvest to examine all long-term options, which include a sale of the business or a refinancing. Coryton has attracted widespread interest, with suitors said to include Russian and Asian energy players.

By Reuters