Recasts to add details on insolvency process and refinery operations throughout
The future of the UK's 105,700 b/d Lindsey refinery is uncertain, after a court placed its operator under special financial measures.
The government's insolvency service said three subsidiaries of UK-based Prax — Prax Lindsey Oil Refinery, Prax Storage Lindsey, and Prax Terminals Killingholme — are in a liquidation process, under which assets are sold to pay off debts.
The refinery appears to be working normally. But the move has come as a surprise to the oil markets and to the UK government.
The government said the news was "deeply concerning", and said there were "longstanding issues with this company", without specifying what these are beyond it being loss making. The government said it wanted "an immediate investigation into the conduct of the directors, and the circumstances surrounding this insolvency."
Lindsey refinery customers and suppliers have been instructed to contact appointed administrators at FTI Consulting, which declined an Argus request to comment further.
It is unclear if the refinery has entered the administration process voluntarily, or if it has been forced in by a creditor. Prax had been engaged in an expansion of its refining activity, agreeing to buy Shell out of Germany's 226,000 b/d Schwedt refinery, but that deal collapsed late in 2024.
Prax also has upstream and retail assets, which appear not to be included in the liquidation process.
If the Lindsey refinery closes the UK would have lost just under a quarter of its total refining capacity since the start of this year. Labour unions Unite and GMB called on the government to safeguard refinery operations and fuel supplies.
The UK energy ministry said today the "government will ensure supplies are maintained, protect our energy security and do everything we can to support workers".
The Lindsey refinery supplies London Heathrow, and manages a pipeline between the refinery and the airport.
The UK was already a net importer of diesel and jet fuel, but its need for premium middle distillates' imports has risen since the closure of Petroineos' 150,000 b/d Grangemouth refinery in Scotland at the end of April. Net UK diesel and kerosine-jet imports rose on the year by 2.6pc and 1.7pc to 793,000t and 762,000t, respectively, in May, according to data from the Joint Organisations Data Initiative (JODI).
Lindsey was mostly running US light sweet WTI, which comprised more than 80,000 b/d, or almost 85pc of all crude delivered to the refinery's Immingham port, according to Vortexa. All was supplied by trading firm Glencore.
Tracking data show two Aframax-sized tankers carrying WTI — Propontis and Kmarin Rigour — are on route to Immingham, although their discharge port could change.
Glencore said it "is continuing to work with key stakeholders in efforts to support a safe and responsible outcome for the refinery."
Crude traders said while some disruptions to operation at Lindsey might take place, a full shutdown in the near future is unlikely. A products trader said "the deals already concluded would be performed, unless the liquidator decides otherwise."
