Murco refinery sale collapses: 60 of 400 jobs remain

Murco's American owners Murphy Oil said it had no choice in the decision

Only around 60 jobs will remain from a workforce of hundreds at an oil refinery in Pembrokeshire after a deal to sell it collapsed.

Workers were "shocked and devastated" as it was confirmed Murco in Milford Haven would be converted to a storage and distribution facility.

The sale to the Swiss-based Klesch Group was called off on Tuesday night after certain conditions were not met.

David Cameron was asked about the closure in Prime Minister's Questions.

Mr Cameron said in response to a question about the Klesch Group from Rutherglen and Hamilton West MP Tom Greatrex: "It's very disappointing what has happened at Milford Haven and we will continue to work with the company concerned and try to find employment opportunities for all those who work there."

Welsh Secretary and local MP Stephen Crabb called the news a "hammer blow for the local economy".

The collapse comes after months of work behind the scenes which saw close co-operation between the Welsh and UK governments.

In addition to its own workforce, the refinery is understood to support a further 4,200 jobs in the area.

Murco's American owners Murphy Oil said it had no choice in the decision.

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.

The rise and fall of Pembrokeshire's oil industry

The collapse of the deal to see the Milford Haven Murco refinery represents another blow to a once-thriving oil industry in west Wales.

The Suez crisis of the 1950s led to the development of the deep-water harbour in Milford to allow big tankers moving crude oil to dock.

Between 1960 and 1973 four American companies - Esso, Texaco, Gulf and Amoco - had opened refineries there, and BP had set up a terminal to serve its refinery at Llandarcy in Swansea.

So where did it all go wrong?

Allan Card, regional officer for the Unite union, said it was an "incredibly difficult moment" for workers at the plant.

"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.

"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."

A woman whose daughter works at the site said the news was devastating.

"She's worked here for seven years. She's got a little boy, she doesn't know what she's going to do now," the woman told BBC News.

Workers gather outside the plant. The company has promised 'generous' redundancy terms

"She doesn't know if her job is safe - they're not telling them anything."

The wife of another worker said they had received the news via email on Tuesday night, adding: "We're shocked and devastated to be honest."

Patricia Calderon, contract process manager at the site, said: "We're running a water treatment plant, but that's now not happening.

"I'm lucky, I can go into other places and in my case that's fine, but it is disappointing for the other workers.

"They're waiting to hear what's happening officially from Murco."

A sub-contractor from Narberth arriving at the site said the deal falling through would be a major blow to families.

"It's very sad. You're going to have lots of young families without work," he said.

"It's going to have a big impact on the community. They won't find jobs like this on these wages in this area. It'll mean travelling now."

'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.

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 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.

Mr Kelly confirmed only around 50 to 60 jobs would be retained to operate the storage and distribution terminal.

Analysis 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.

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.

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.

Murco says there are no other buyers for the refinery so it will now begin the decommissioning process.

Murco's owners visited the site on Wednesday morning and sent a message to the workforce expressing "disappointment and frustration".

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."

Mr Kelly announced workers would receive a "generous" redundancy package of at least 30 weeks' pay.

"I have spoken to some workers today and they share our feeling of frustration and disappointment."

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.

Its leader Jamie Adams said the group would meet next week.

"There was always a plan B," he said, adding they had always feared this day would come while hoping it would not.

He promised they would do everything possible to "soften the blow".

Mr Adams said around one-sixth of Wales' exports came from the refinery, meaning the closure had wider significance beyond the south west of the county.

Councillor Huw George, cabinet member for environmental and regulatory services, told BBC Wales the news was a terrible blow for the area.

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.

"We will have to move forward quickly to create those pathways so the employees of Murco can move quickly on to new employment."

The Murphy Oil website was still reporting the deal as going ahead on Wednesday morning

The oil refinery has been up for sale for four years