The potential closure of the Lindsey plant reflects growing concerns over the health of Britain’s oil and gas industry, particularly after the Labour Government banned all new drilling in the North Sea.
On Monday, the Official Receiver was brought in to take control of the refinery business and ensure “the continued safe operation of the site”, while City firm Teneo was appointed to manage the rest of the group.
A spokesman for the Insolvency Service said the Government would issue a statement later on Monday.
It is normal practice for the state to take control of potentially hazardous industrial sites when the owner has declared insolvency.
The union Unite, which represents hundreds of workers at the Lindsey refinery, demanded that ministers step in to save the business, which looks set for liquidation.
The refinery saw its losses nearly double to about £53m in the year to the end of February last year, accounts show.
In comparison, Prax’s petrol stations business and the oil and gas operations are thought to be profitable, with administrators racing to find buyers, as first reported by Sky News.
But Sharon Graham, Unite’s general secretary, 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 industry on a cliff edge. It has failed to act and instead put its fingers in its ears.
“The Government needs a short-term strategy to keep Lindsey operating and a sustainable long-term plan to fully protect all oil and gas workers.”
‘Considering all options’
Meanwhile, Teneo said administrators were urgently assessing State Oil’s financial position and the prospect of selling other parts of the business.
Prax operates petrol stations under the Harvest Energy, Total Energies and Breeze brands. It licences the Total name from the French oil giant.
Clare Boardman, joint administrator, 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.”
