International commodities trader Glencore has started negotiations with the British government to determine the future of its crude oil supply contract with the Lindsey refinery, recently placed under administration.
Increased economic and energy risk
The Lindsey refinery, with a refining capacity of 113,000 barrels per day, was previously owned by the Prax Group, which was declared insolvent earlier this week. The simultaneous insolvency of Prax and its parent company directly impacts several hundred local jobs and could increase the United Kingdom’s dependency on imported refined products.
In 2024, Glencore won a tender to supply crude oil to the Lindsey refinery, replacing competitor Trafigura, according to three sources cited by the Reuters agency. The current administration situation now obliges the Swiss trader to clarify its contractual position and obligations with British authorities.
Government investigation launched
The British government immediately launched an investigation into the circumstances surrounding the collapse of Prax Group. This inquiry aims in particular to determine whether Prax directors fulfilled their legal obligations and to identify the precise causes of the company’s insolvency.
Consulting firm FTI Consulting, appointed by the authorities as special manager to assist the Official Receiver (the UK official responsible for managing insolvency situations), redirected all queries to the relevant UK departments, notably the Department for Business and Trade and the Department for Energy Security and Net Zero.
Prudent silence from authorities involved
Asked about ongoing discussions and about the duration for which the refinery could continue operations in the absence of a formal agreement with Glencore, these ministries did not provide further details.
The Department for Energy Security and Net Zero simply reiterated an earlier statement that authorities would ensure continuity of energy supplies on the British market.
These crucial exchanges between Glencore and London could define future conditions for the British energy market amid delicate circumstances, while the European oil sector continues to experience heightened volatility.
