Charles Hendry says UK refining sector has ‘very strong’ potential; government to publish strategy paper in the autumn.

Charles Hendry, UK minister of state for energy, spoke to GTForum on the sidelines of the Energy Institute’s International Petroleum Week conference in London today, on the subject of the Coryton refinery and the importance of refining in the UK.

“The administrator [Steven Pearson, PricewaterhouseCoopers] has done a very effective job in working with all the different parties. First of all, to get a couple of shipments of crude to come in and now to get a longer-term relationship going over the next three months. That gives him some space to find a buyer. That’s the strategy he set out to us at the outset and we’re very encouraged by the progress that he’s made. He’s also said he found the best engagement between government, administrator, industry, trade unions and local community on this he’s ever come across, which I think has been very helpful to him in terms of bringing in new business partners. We’re hopeful that it can be kept going, there’s still a lot of work to be done, but it looks encouraging,” Hendry says.

“We think Coryton has a very real future in the UK economy. Of the Petroplus refineries, it’s probably the stronger one and therefore while there is clearly  challenges facing the refining sector across the whole of Europe, Coryton is in a strong position to survive in the future.”

When asked if it would be worth paying a subsidy if the UK refining industry became uneconomic over the long-term for the purpose of maintaining energy security, Hendry replied by saying that the sector is currently attracting investment and has significant potential.

“We’re not in that situation and if you look at what’s happened in the past year, Essar have come and taken over the Shell refinery, we’ve seen others coming in, Valero come in. So, we’ve seen significant global players willing to invest in the UK refining system and they’re not here to mothball them, they’re here to invest in them and take them forwards,” he said.

“So there’s a very strong potential here in our sector, we do think it’s an important strategic sector. We’re currently preparing a strategy paper which we’ll publish later in the year about how we view the importance of that industry and we have an organisation called the Downstream Oil Industry Forum which brings together industry and government to work on that,” Hendry said.

He added that the paper is currently expected to be published in the autumn of this year.