Insolvent UK Lindsey Refinery Continues to Operate but Closure Looms

The U.K. government confirmed that it is funding operations at the 113,000 b/d Lindsey refinery for the time being while it assesses options for the future of the site after owners Prax Group filed for insolvency on Monday.

Energy Minister Michael Shanks told MPs at the House of Commons that an official receiver will run the refinery in the short term, ensuring safe operations while it looks for a potential buyer.

However, the minister admitted that the refinery is “in very bad shape” after having failed to turn a profit since its takeover in 2021, accumulating £75 million ($103.2 million) of losses by February 2024.

“Clearly, our very first option is to see whether someone wants to take on the refinery as a going concern, and we will put every effort into trying to find one. If that is not possible, we will look at what the wider future of the site might be and what possibilities exist for other industries on that site,” he said.

Although no redundancies have been announced yet and employees continue to be paid for now, over 440 jobs are at risk and MPs were already discussing support options for the workers.

The closure of Lindsey would leave the U.K. with only four major operating refineries, following the permanent shutdown of the 158,000 b/d Grangemouth facility in Scotland only two months ago.

Lindsey directly supplies jet fuel to Heathrow Airport as well as 35% of the U.K.’s gasoline consumption and 10% of diesel demand.

The Energy Minister said that the government is committed to secure the long-term future of the U.K. refining industry, and that it is assessing whether the sector should be added to the compensation scheme that helps energy intensive industries offset carbon pricing costs.

Trade association Fuels Industry UK said that this is a positive first step that must be followed up by further action.

“We must now see a shift towards delivering the changes that can make a difference—inclusion in the Carbon Border Adjustment Mechanism and addressing hugely expensive industrial energy and carbon costs—to put us on an even playing field with the rest of the world,” said CEO Elizabeth de Jong.

–Reporting by Jaime Llinares Taboada, jllinares@opisnet.com