Petroplus Holdings AG, Europe’s largest independent refiner, is in talks with lenders to get the funds it needs to buy crude and keep its plants open as supplies dwindle at a facility in France, according to a labor union.
Company management, which announced yesterday that banks froze about $1 billion in uncommitted loans, are also meeting with unions today, Nicolas Vincent, a representative of France’s CGT union, said by telephone.
“If they can get credit to buy crude, then refinery operations won’t be halted,” Vincent said after talks with local managers at Petroplus’s Petit Couronne plant in Normandy. That refinery has enough oil to operate until Jan. 3, he said.
Petroplus fell as much as 11 percent to 1.65 Swiss francs in Zurich trading, extending yesterday’s 46 percent slump. The stock was down 6.5 percent at 1.73 francs as of 3:02 p.m. local time, bringing its decline this year to 86 percent.
The refiner, based in Zug, Switzerland, has struggled to bolster earnings as slowing economic growth erodes profits from crude-processing. Petroplus, which posted a net loss for the past three quarters, said yesterday the frozen loans are “critical” for its European operations, which are located in Belgium, France, Germany, Switzerland and the U.K. and have a combined capacity of about 667,000 barrels a day.
French union officials including Laurent Patinier, a representative of the CFDT, said earlier today they understood Petroplus management had called meetings with European unions, including at Petit Couronne, to announce the halt of refineries.
“They are clearly planning to stop the five European refineries,” Patinier said. “When you can’t pay for crude, you have to stop operations.” The Petit Couronne plant, near Rouen, is already operating at lower production rates than normal because of weakening refining margins, he said.
Petroplus said yesterday it’s “evaluating additional strategic options” to maintain European processing and marketing. Profits from turning Brent crude into fuels in northwest Europe, a benchmark for the region, sank to 51 cents a barrel last month from $1.52 in October, the International Energy Agency said in a Dec. 13 report.
Petroplus executives based in Zug will be speaking with union representatives by teleconference later today, the CGT’s Vincent said, adding that “the situation is uncertain.”
Chief Executive Officer Jean-Paul Vettier couldn’t immediately comment when contacted by Bloomberg News today. Messages left with Fredrik Olsson, a company spokesman, and the refiner’s investor-relations department in Zug, weren’t returned.
Apart from Petit Couronne, Petroplus’s refineries include the Antwerp facility in Belgium, the Ingolstadt plant in Germany, the Cressier complex in Switzerland and the Coryton site in England.
Managers in Antwerp planned to meet union officials at 3 p.m. local time today, Benny Willems, a representative of the ABVV union, said by phone. He was unable to comment on the level of crude stockpiles at the plant. Switzerland’s Unia labor union couldn’t comment on operations at the Cressier refinery.
“Being unable to purchase any new crude means that production could only last for a few more days,” said Andreas Escher, an analyst at Vontobel Holding AG in Zurich. A sale of refineries or a crude-supply agreement with a partner would take too long to alleviate the “liquidity crunch,” Escher said in a note, putting the refiner’s “hold” rating under review.
There are currently no talks between Petroplus and employees or union representatives at the Ingolstadt site, Markus Hautmann of the IG BCE union’s chapter in Bavaria, said by telephone. The union is awaiting the results of talks between Petroplus and its banks, he said.
A call to the Coryton refinery was referred to the holding company in Zug.