Oil giant stumbles: UK government to probe Lindsey Refinery insolvency

The UK government may start an investigation into the owners of Lindsey Oil Refinery following the site’s sudden collapse into insolvency.

The development came as a court issued a winding-up order for Prax Lindsey Oil Refinery Limited, Prax Storage Lindsey Limited, and Prax Terminals Killingholme Limited.

The Official Receiver, along with FTI Consulting, has been brought in to oversee the liquidation and help manage the process.

The insolvency proceedings started as Prax Group, which acquired the refinery from TotalEnergies in 2020, recorded losses of around Euro 75 million ($103 million) between the acquisition and February 2024.

According to the government, Prax repeatedly failed to provide sufficient information about the losses, making it difficult for officials to assess the refinery’s financial position.

Lindsey Oil Refinery's collapse is yet another setback for the UK’s struggling refining sector.

It follows Ineos’s decision to halt crude oil refining at its Grangemouth site in Scotland, a move that will leave the country with just four operational refineries.

Jobs hang in balance as unions urge government action

The insolvency threatens as many as 2,500 jobs across the broader Prax Group, although the Lindsey refinery itself directly employs around 440 workers.

For now, staff at the site remain on the job and continue to receive their pay, with no immediate redundancies planned.

Trade unions, especially Unite are urging the government to step in urgently to safeguard jobs, maintain fuel supplies, and support the local community.

The refinery has the capacity to produce 5.4 million tonnes of fuel annually and handles more than 20 different types of crude oil, producing petrol, diesel, bitumen, fuel oil, and aviation fuel.

If it shuts down, the UK will be forced to rely more heavily on imported fuel amid volatile oil prices after the Israel-Iran war.

Lindsey Oil Refinery insolvency: UK government's response

UK Energy Minister Michael Shanks stated that financial records from Prax revealed the Lindsey refinery had racked up losses of approximately Euro 75 million ($103 million) between its acquisition from TotalEnergies in 2021 and February 2024.

He noted that Prax failed to provide satisfactory responses to repeated government inquiries about the losses, making it difficult for officials to evaluate the refinery’s financial stability.

“The company has left the government with very little time to act,” he said.

The government said that an investigation will be launched into the reasons behind the companies' collapse, as well as the actions of both current and former directors.

FTI Consulting has been appointed as a special manager to assist with the liquidation process, according to a statement on the UK Insolvency Service website.

Prax’s upstream operations include the Lancaster oilfield in the UK North Sea.

Beyond its refining and upstream assets, the company operates around 250 fuel retail sites across the UK, many of them under the TotalEnergies brand.

It also owns petrol stations in multiple European nations.