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Milford Haven's Murco oil refinery deal collapses Murco oil refinery: Only 60 jobs remain as sale collapses
(about 2 hours later)
Hundreds of jobs are under threat as a proposed deal to buy a Pembrokeshire oil refinery has collapsed. Only around 60 jobs will remain from a workforce of hundreds at an oil refinery in Pembrokeshire after a deal to sell it collapsed.
Murco's deal to sell the Milford Haven refinery to the Swiss-based Klesch Group is "no longer in effect" as conditions were not met. Murco in Milford Haven confirmed the site would be converted to a storage and distribution facility.
American owners Murphy Oil said it had "no choice" but to use the site solely for storage and distribution with "a significant number of redundancies". The sale to the Swiss-based Klesch Group was called off on Tuesday night after certain conditions were not met.
Welsh Secretary Stephen Crabb said: "We're very, very disappointed." Welsh Secretary and local MP Stephen Crabb called the news a "hammer blow for the local economy".
He called it a "hammer blow for the local economy". In addition to its own workforce, the refinery is understood to support a further 4,200 jobs in the area.
He told BBC Wales: "The problem wasn't on the government's side, the problem wasn't on the seller's side. The problem was the buyer wasn't finally in a position to do the deal. Murco's American owners Murphy Oil said it had no choice in the decision.
"That suggests that there were perhaps problems with the financing at the last minute."
'Fog of confusion'
Mr Crabb, who is also the MP for Preseli Pembrokeshire which covers Milford Haven, said the deal had all looked to be on track until late last week when it "started to unwind" over the weekend.
"There was a fog of confusion over the weekend over why the deal wasn't happening," he added.
The refinery, which employs 400 people, will now enter a shut-down period and will be decommissioned while the company looks for a new buyer.The refinery, which employs 400 people, will now enter a shut-down period and will be decommissioned while the company looks for a new buyer.
According to the Unite union, the refinery also employs a further 200 contract workers.According to the Unite union, the refinery also employs a further 200 contract workers.
Bryan Kelly of Murphy Oil said: "For the past four years we have worked tirelessly to secure a positive outcome for the future of the refinery and our workforce. Allan Card, regional officer for the Unite union, said it was an "incredibly difficult moment" for workers at the plant.
"Unfortunately, and despite every effort on the part of Murphy and our employees, we have been denied the desired outcome." "It's bitterly disappointing to have come so far, after so much hard work and to get to the 11th hour for it to fail," said Mr Card.
He told BBC Wales on Wednesday: "We're all disappointed and frustrated that despite four years of our best efforts to find a buyer for the refinery who would continue to operate it as such, we have been unable to do so. "Over the weekend we were picking up messages that there was some sort of glitch but I was under the impression that it wasn't serious enough to stop the signing by the end of the week."
'Fog of confusion'
The sale to the Swiss group was agreed in the summer, and was supposed to be signed off last Friday, but that date was extended into this week.
Klesch Group founder Gary Klesch told BBC Wales in July "thousands of jobs" would be secure at the Milford Haven site in the deal the company had agreed with Murphy Oil.Klesch Group founder Gary Klesch told BBC Wales in July "thousands of jobs" would be secure at the Milford Haven site in the deal the company had agreed with Murphy Oil.
Mr Kelly said the refinery would now be turned into a storage and distribution site, and added: "We know that's difficult news for our employees. However the group has declined to comment following Tuesday's announcement.
Mr Crabb, MP for Pembrokeshire which covers Milford Haven, said the deal had all looked to be on track until late last week when it "started to unwind" over the weekend.
"There was a fog of confusion over the weekend over why the deal wasn't happening," said Mr Crabb. "The problem wasn't on the government's side, the problem wasn't on the seller's side. The problem was the buyer wasn't finally in a position to do the deal.
"That suggests that there were perhaps problems with the financing at the last minute."
Mr Crabb added: "The loss of those jobs will leave a very big hole in the economic activity of west Wales and it will take a number of years for the local economy to recover.
"It does feel very much like it's reached the end point. We're very, very disappointed."
Bryan Kelly, vice-president of UK operations for Murco, said despite every effort on the company's part, they had "been denied the desired outcome.
He told BBC Wales on Wednesday: "We're all disappointed and frustrated that despite four years of our best efforts to find a buyer for the refinery who would continue to operate it as such, we have been unable to do so.
Mr Kelly said the refinery would now be turned into a storage and distribution site, and added: "We know that's difficult news for our employees."
He said because the negotiations were commercially sensitive he could not go into details of what had happened, but explained: "There were a number of conditions that both parties agreed had to be met and unfortunately those conditions were not met."He said because the negotiations were commercially sensitive he could not go into details of what had happened, but explained: "There were a number of conditions that both parties agreed had to be met and unfortunately those conditions were not met."
He said macroeconomic conditions in the refinery business in Europe as a whole had been a factor in the outcome, and believed that after speaking to dozens of potential buyers in the past few years they had now exhausted the possibility of selling the refinery as a going concern.He said macroeconomic conditions in the refinery business in Europe as a whole had been a factor in the outcome, and believed that after speaking to dozens of potential buyers in the past few years they had now exhausted the possibility of selling the refinery as a going concern.
Economy Minster Edwina Hart said: "This is a devastating blow to staff at the Murco refinery and companies within the refinery's supply chain, as well as the local communities around Milford Haven." Mr Kelly confirmed only around 50 to 60 jobs would be retained to operate the storage and distribution terminal.
Allan Card, regional officer for the Unite union, said it was an "incredibly difficult moment" for workers at the plant. Murco's owners visited the site on Wednesday morning and sent a message to the workforce expressing "disappointment and frustration".
"It's bitterly disappointing to have come so far, after so much hard work and to get to the 11th hour for it to fail," said Mr Card. They said in a statement: "You, our employees, continue to be our number one priority, and we remain committed to doing all we can to ensure you are supported through this very difficult time."
"Over the weekend we were picking up messages that there was some sort of glitch but I was under the impression that it wasn't serious enough to stop the signing by the end of the week. Mr Kelly announced workers would receive a "generous" redundancy package of at least 30 weeks' pay.
"This is a devastating blow to the employees and to west Wales." "I have spoken to some workers today and they share our feeling of frustration and disappointment."
Pembrokeshire councillor Huw George, cabinet member for environmental and regulatory services, told BBC Wales the news was a terrible blow for the area.
He praised previous support from the Welsh government and Edwina Hart, saying: "We're going to have to work with everybody to try and ensure there are avenues for this workforce, these wonderful people at Murco to move forward.
"We are a major employer in the energy division of the UK. However we must try to open our eyes and see what else is available.
"We will have to move forward quickly to create those pathways so the employees of Murco can move quickly on to new employment."
Analysis by BBC Wales' business correspondent Brian MeechanAnalysis by BBC Wales' business correspondent Brian Meechan
It has been a story of great hope followed by bitter blow. Twice it has looked like the Murco oil refinery would be saved, only for the deal to collapse close to completion.It has been a story of great hope followed by bitter blow. Twice it has looked like the Murco oil refinery would be saved, only for the deal to collapse close to completion.
The Klesch Group has just entered into a major deal to buy large parts of Tata Steel's operations in the UK and Europe, though that does not include Tata's Welsh facilities.The Klesch Group has just entered into a major deal to buy large parts of Tata Steel's operations in the UK and Europe, though that does not include Tata's Welsh facilities.
Perhaps then the sale of the refinery at Milford Haven was squeezed off the agenda as the bigger takeover became the priority for Klesch.Perhaps then the sale of the refinery at Milford Haven was squeezed off the agenda as the bigger takeover became the priority for Klesch.
It is a devastating blow to the workers at the site and also to the local community.It is a devastating blow to the workers at the site and also to the local community.
It is estimated the refinery contributes £30m a year to the economy in Pembrokeshire and supports a further 4,200 jobs in the area.It is estimated the refinery contributes £30m a year to the economy in Pembrokeshire and supports a further 4,200 jobs in the area.
Murco says it has no other options on the table but to sell the refinery.Murco says it has no other options on the table but to sell the refinery.
The company said it would support its employees "as much as possible." Economy Minster Edwina Hart said: "This is a devastating blow to staff at the Murco refinery and companies within the refinery's supply chain, as well as the local communities around Milford Haven."
'End point' Pembrokeshire council has already been in touch with the Welsh government to reconvene the Murco task force, originally been set up to help Murphy Oil find a buyer for the site.
Mr Crabb added: "The loss of those jobs will leave a very big hole in the economic activity of west Wales and it will take a number of years for the local economy to recover. Its leader Jamie Adams promised they would do everything possible to "soften the blow"
"It does feel very much like it's reached the end point. We're very, very disappointed." Councillor Huw George, cabinet member for environmental and regulatory services, told BBC Wales the news was a terrible blow for the area.
He said the UK needed facilities like the refinery - one of only seven in the country - for energy security but believed it maintaining the site in its present state was now not going to happen. He said: "We are a major employer in the energy division of the UK. However we must try to open our eyes and see what else is available.
"The goal is now they want to retain some jobs on the site and keep it as a terminal operation," he said. "That's a storage for oil and petroleum products. That's not refining on site and requires a fraction of the jobs that a refinery would. "We will have to move forward quickly to create those pathways so the employees of Murco can move quickly on to new employment."
"The hope would be that they could find a company that would buy it as storage operation."