Total has agreed to sell its 110,000 b/d Lindsey refinery in the UK to London-headquartered trading and logistics company Prax Group, for an undisclosed sum.
"This transaction is in line with our forward-looking strategy for Total's European refining base, which involves focusing our investments on integrated refining and petrochemical platforms," Total refining and chemicals president Bernard Pinatel said today.
Total has called integration "the backbone" of its refining and chemicals operations, and it is directing most of its capital allocation for these areas on its six large integrated platforms in Belgium, South Korea, the US, Saudi Arabia, Qatar and France.
"Since the sale of our British retail network in 2011, the Lindsey refinery has not been part of Total's downstream system," Pinatel said.
Total's European refining business saw its average margin narrow to $14.3/t ($1.94/bl) in the second quarter, compared with $26.3/t in January-March 2020 and $27.6/t in the second quarter of 2019. Total chief executive Patrick Pouyanne has called refining margins "catastrophic", as demand for oil products has plummeted because of lockdowns caused by the Covid-19 pandemic.
The UK leaving the EU might have also played its role in Total's decision to sell Lindsey. The refinery's general manager Jean-Marc Durand told Argus last year Lindsey could be affected should the UK decide to lower or remove tariffs on foreign oil product imports.
Following a strike wave across the French refining industry in 2010, Total made a pledge not to shut any of its five French oil refineries until 2015. That year, it announced the conversion of its 160,000 b/d La Mede site into a biorefinery. Total is now reviewing the future of its 93,000 b/d Grandpuits refinery in France, after leaks on the pipeline that supplies its feedstock from the Atlantic port of Le Havre in 2014 and 2019.
Total's refinery runs averaged 1.444mn b/d in the first quarter. Of this, 255,000 b/d was in France where a number of the firm's plants had operational issues, and 756,000 b/d was in the rest of Europe.
Last year, its worldwide refinery throughputs averaged 1.671mn b/d, down by 10pc from a year earlier because of a six-month shutdown at Grandpuits. The company's global refinery runs were 1.775mn b/d in 2014, including 639,000 b/d in France and 734,000 b/d in the rest of Europe.
Prax Group does downstream marketing and distribution through its Harvest Energy brand. Total said the deal will make Prax, which also operates 150 service stations, more integrated and competitive in the UK and will secure its local supply.
The Lindsey sale is expected to be completed by the end of the year, once conditions have been satisfied, Total said.
