Murphy Oil May Close U.K. Refinery If New Buyer Search Fails

Murphy Oil Corp. started talking to workers about job cuts at its U.K. refinery and may close the plant if it can’t find a buyer. Negotiations halted with the latest potential acquirer in the firm’s three-year search.

The company and its U.K. unit plan talks with a “small number of interested parties, which may or may not lead to allowing the refinery to continue to operate,” Murco Petroleum Ltd., the subsidiary of the El Dorado, Arkansas-based company, said in an e-mailed statement. Mark Antelme, a spokesman for Murco, confirmed talks about possible job losses in an e-mailed response to questions.

The Milford Haven plant in Wales, with capacity to process 135,000 barrels of oil a day, may be the third in the U.K. to close in five years. Falling European oil-products demand, high crude prices and modern facilities in Asia and the Middle East are squeezing the plants’ profits from making fuels. Murphy Oil said March 17 it was in advanced talks with a potential buyer.

Labor union Unite called on the U.K. government to “step in and save Milford Haven refinery,” where 400 jobs are at risk.

“Jobs, the economy and the U.K.’s security of supply are all at stake,” Andy Richards, Unite Welsh secretary, said in an e-mailed statement today. “The U.K. government cannot repeat the mistake of Coryton and allow another of the U.K.’s oil refineries to close.”

Storage Facilities

The Coryton refinery in the south and Teesside plant in northern England were converted to storage facilities. The possible closing of Milford Haven would leave the U.K. with six crude-processing plants.

Murphy Oil said in January 2012 that it may convert the site into a storage or import terminal. A year earlier, it had expanded the refinery from 108,000 barrels daily.

“Murco’s reported difficulties in finding a buyer for its Milford Haven refinery are consistent with the broader challenges facing the U.K. and European refining industry,” Toril Bosoni, an analyst at the International Energy Agency, said in e-mailed response to questions. “We have long warned of more closures looming for 2014 and 2015.”

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE