Government demands investigation after Lindsey oil refinery owner collapses

The Government has called for an urgent investigation after the group behind one of Britain’s largest oil refineries collapsed into administration, putting hundreds of jobs at risk.

State Oil – the parent company of Prax Group, which owns the Lindsey refinery in North Lincolnshire – appointed administrators on Monday.

A separate winding-up order has also been made against the Lindsey oil refinery and related businesses and a liquidator has been appointed.

More than 180 staff are employed by State Oil, while it is thought that around another 420 work at the Lindsey refinery.

Energy minister Michael Shanks called on the company’s owner to “put his hands in his pockets and deliver proper compensation for the workers”.

He said the Government is demanding an investigation into the conduct of the company’s directors and the circumstances surrounding its failure.

The Lindsey site is one of only five large oil refineries remaining in the UK after the recent closure of the Grangemouth plant in Scotland.

Prax Group is led by majority owner and chairman and chief executive Sanjeev Kumar Soosaipillai, who bought the Lindsey oil refinery from French firm Total in 2021.

Mr Shanks vowed to “ensure supplies are maintained, protect our energy security” and said Energy Secretary Ed Miliband “is today writing to the Insolvency Service to demand an immediate investigation into the conduct of the directors and the circumstances surrounding this insolvency”.

He later told the Commons: “The Government believes the business’s leadership have a responsibility to the workers and the local community, and we are calling on them to do the right thing and provide support to the workers through this difficult period.

“The wealthy owner cannot wash his hands of his obligations to the workers and their families, and that’s why we are calling on him to put his hands in his pockets and deliver proper compensation for the workers.”

Mr Shanks added the Government was told about commercial difficulties “at the end of April”, with the refinery having “recorded a total of around £75 million worth of losses between its acquisition in 2021 and the financial year ending in February 2024”.

He said: “The Secretary of State was reassured by the company that there was no immediate closure risk to the refinery. A week ago, the business changed their position and said they feared it could no longer be a going concern.

“We repeatedly asked them at official and ministerial level what the financial gap was, to work out whether the Government could help bridge that gap, but the company were unable to share that basic information.”

Trade union Unite said the Government needed to urgently intervene to help protect UK fuel supplies and jobs.

Unite general secretary Sharon Graham said: “The Lindsey oil refinery is strategically important and the Government must intervene immediately to protect workers and fuel supplies.

“Unite has constantly warned the Government that its policies have placed the oil and gas industry on a cliff edge.”

Built in 1968, the Lindsey refinery can process around 113,000 barrels of oil a day.

Clare Boardman, joint administrator of State Oil and Prax, said: “We appreciate that this is a very difficult and uncertain time for the employees and everyone involved and we will be on site to support them during this challenging period.

“We will be considering all options for the group, including the prospect of a sale for the group’s upstream business and retail operations in the UK and Europe, all of which remain outside of insolvency.

“We thank the group’s team members and other stakeholders for their continued support.”

Prax Group was not immediately available for comment.