More About PetroPlus

It has been more than a month now since the banks pulled the plug on PetroPlus' credit line for crude oil purchases. During that time there has been a lot of hype about outside investors, mysterious bank connections providing more money, sales of refineries, permanent shutdowns of refineries, etc.

The apparent truth, to date, is that PetroPlus got some credit from one bank or another that allowed PetroPlus to keep the Coryton (UK) and Ingolstadt (Germany) refineries on line.

Recently there have been some articles in the Swiss newspapers that indicate that PetroPlus was never run by refinery people, but by investors and financial people with the idea of putting a "refining conglomerate" together and then flipping it to the highest (or maybe first) bidder. Sorry - "flipping" comes out of the Internet website business, it means selling a newly-made website quickly to earn some money - also quickly. In other words, to make a "quick buck."

Other articles are saying that the PetroPlus business model - trying to use the leverage of a refiner to be able to make use of arbitarage between crude oil and product prices - was a flop in the USA, and the continuing situation of excess and expensive refinery capacity in Europe was the final kiss of death for Petro Plus.

In any case, whatever the intentions were, the business model has proven itself to be a financial flop - for example, 11 losing quarters out of the last 12. Now, a consulting company is running the Coryton Refinery under the instructions of a British judge, and the Ingolstadt Refinery is running at about 50% of capacity using ??? for money. One has to wonder if this last stage in the process has not been a ruse to allow PetroPlus to close the unprofitable Antwerp (Belgium), Petite Couronne (France), and Cressier (Switzerland) refineries plus other lower level facilities (terminals) without having to pay up for the closure costs: personnel layoffs, ante up for the personnel pension funds, environmental cleanup costs, company closures, etc., not to mention avoiding much of the loan repayments due. It could be the icing on the cake for creating a "Petro Minus 3" with only two reasonably profitable refineries and minimum remaining debts.

What do you think? I would like to hear from you!