Coryton Oil Refinery

Jackie Doyle-Price Excerpts

Wednesday 27th June 2012 Commons Chamber

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Thank you, Mr Deputy Speaker, for giving me the opportunity to express the grave concern that surrounds yesterday’s announcement that the Coryton oil refinery in my constituency will close. When the company was placed into administration five months ago, many of us believed that, because of its profitability and its productivity, it would not be long before it found new owners. So, five months later, and with no buyer coming forward to operate the site as a refinery, I have to say that this is a very sad day. I had hoped that this debate would never have to take place.

The intention of my debate before the announcement was to lay out the fact that this was not just another business in administration. I would have explained to the House and the Minister the importance—strategically, economically, socially and historically—of the Coryton oil refinery. Before I proceed, I want to place on record my heartfelt thanks to everyone who has been working so hard over the last five months to keep the refinery operating.

[Jackie Doyle-Price (Thurrock) (Con)]

I associate myself with those comments and pay my own personal tribute to my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe), who has worked tirelessly behind the scenes to bring all the interested parties together. He has done so with dedication to achieving the outcome rather than to generating column inches, which has been the characteristic of some Opposition Members. Does he agree that the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry), who will reply from the Dispatch Box today, has also been absolutely sincere in his commitment to achieve a positive outcome for the refinery?

[Stephen Metcalfe]

I thank my hon. Friend for her comments. Yes, I would like to thank the Minister personally for his help and support. I would also like to thank Ministers from the Department for Business, Innovation and Skills and from the Treasury for what they have done to help me work with all those involved to find a solution.

--- Later in debate ---

[Stephen Metcalfe]

Yes. When the company went into administration, finding that all the debt was leveraged against that one refinery must have come as a shock to all concerned. That just shows the mismanagement of the parent company in Switzerland.

Once appointed, the administrators stabilised the situation and began looking for a long-term solution. Two options soon emerged, although I am sure that many others were investigated: sale to a third party and financial restructuring. The financial restructuring process began very well, but it became obvious fairly quickly that there was a large funding gap and it would not be workable. As for the sale side, PWC invited expressions of interest and numerous possibilities emerged, from lift and shift to sale as a refinery and, finally, sale as a fuel terminal, which would give a fuel company greater access to the Thames and therefore to the south-east. The site has always been considered particularly attractive owing to its close proximity to London and its deep water jetty, but ironically those factors are now to be the refinery’s downfall.

I understand that following examination of the offers, a Russian consortium was identified as having presented the most favourable bid. It wanted to operate Coryton as a refinery, thus saving the 900 to 2,000 jobs that it supports. The next best bid came from a bidder that wanted to operate the site as a terminal. In the light of yesterday’s announcement, many have expressed surprise that no one wanted to buy the site as a refinery. Although I do not possess all the details, I do not believe that that is the case. What I do believe is that a number of credible, sustainable bids were presented, but that none of them ultimately exceeded the bid for an alternative use. I shall say more about that later.

Last month, despite all that hard work, the administrators, PWC, made the announcement—which I think we had all prayed we would never hear—that no credible offer was on the table and no one was willing to operate the refinery, and that therefore it was proceeding towards closure. As I have said, I believe that there were credible offers on the table, but that they were not high enough. Yesterday, PWC struck a final blow and announced that it had done a deal with Shell to operate the site as a terminal. The timing of that announcement—before tonight’s debate—made redundant much of the case that I wanted to build to save the refinery, but I ask the House to bear with me none the less.

As Members can imagine, following that announcement the situation has been very fluid over the last 24 hours. The one thing that has been constant is the contact that I have received from numerous parties expressing deep concern about the way in which the administration has been conducted. They talk of great secrecy surrounding the sale; they say that alternative outcomes could have been explored but were not, and that barriers were put up.

Following yesterday’s announcement, I have a better understanding of the events that led up to it, and I think it important to examine those events. My current understanding is that the Russian-led team bid the highest amount, and that the bid was proceeding well until something happened. I have no idea what that something was. I have a number of notions, but I cannot confirm any of them. Whatever happened, however, the upshot—so I am told—was that that information was not communicated properly by the administrators to the buyers. I have to say I find that extraordinary—although in light of my own experiences, not surprising. I still have not been officially informed by PWC that a deal has been done. Although I have attended every stakeholder meeting, I found out yesterday, when the press contacted me—although I did subsequently have an e-mail from one of the partners, Vopak.

[Jackie Doyle-Price]

Naturally, as we have reached the endgame, there is lots of rumour and speculation, and certainly the Russian bid has been trying to get its case across since discovering it has not won. Is there not the following alternative theory, however: far from this having been in the hands of the administrators, a view was taken that perhaps the company in question was not good for the money and was looking for an opportunity to drop the price? Shell is part of the winning consortium, and given that Shell Haven has been closed, and given, too, the supremacy of this location—as my hon. Friend described—would not Shell have gone for any price?

[Stephen Metcalfe]

It is difficult for me to speculate about what might, or might not, have happened and what discussions might have taken place, but I will say that more than one company has been in touch with me.

I find it extraordinary that the administrators, charged with getting the best deal for the bond holders—to whom, after all, they are responsible—did not inform the company with the largest bid at the time that there was some problem or the situation had changed. Perhaps if things had been different and if communications had not broken down, we might have been in a different position. I do not know what happened, but the upshot was that the bid was dropped. I believe that at that point trust broke down between the administrators and the Russian consortium wishing to buy the refinery. For the record, I have been aware for some time that both parties in this main bid were represented by PWC and while I make no comment about the existence of a Chinese wall I would be very interested to hear how both sides view the behaviour of the other, bearing in mind they were both from the same firm.

As I said many times in the run-up to yesterday’s announcement, there has always been another bidder. I am concerned that it might not have been given a fair crack of the whip. I do not know whether that is true. This is a complex situation and I do not pretend to have the expertise required to pick through the detail and assess the quality of the arguments, from both sides, about what happened.