State Oil, the parent company of Prax Group, owner of the Lindsey oil refinery in Lincolnshire, called in administrators after mounting losses at the refinery.
A spokeswoman for Teneo said: “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.”
The insolvency is a major blow to the UK energy sector. The refinery, which can process up to 111,000 barrels of oil a day, mostly produces petrol and diesel for road vehicles, while also making products ranging from fuel oil and kerosene to aviation fuel.
Michael Shanks, Energy Minister said news of the insolvency was “deeply concerning “The Government is urgently acting in response to the deeply concerning news of today’s announcement of insolvency at Prax Lindsey Oil Refinery.
“The Secretary of State is writing to the Insolvency Service to demand an immediate investigation into the conduct of the directors, and the circumstances surrounding this insolvency.
“The company has left the Government with very little time to act. The Government is supporting the Official Receiver to carry out their statutory duties, including managing the situation on the site to determine the next steps. This will include urgently reporting back on all potential uses of the site, prior to a wind-down of the refinery.
Any closure of the plant at Immingham, Lincolnshire, is set to reduce competition to refine oil into petrol and diesel. It comes as the Competition watchdog reported that UK drivers are still being hit with high fuel margins despite lower prices at the pump.
Fuel prices across the UK fell for both petrol and diesel over the three months to the end of May by 7.6 pence per litre (ppl) and 8.4 ppl respectively.
Supermarket fuel margins fell from 8.9 per cent in December 2024 to 7.9 per cent in February 2025, before rising to 8.3 per cent in March 2025, the regulator found. Profit margins at non-supermarket fuel margins fell from 9.9 per cent in December 2024 to 8.9 per cent in January, before rising to 10.4 per cent in March.
It found that petrol retail spreads averaged 15.4 ppl – 1.5 ppl higher than the previous four-month period – and still more than double the average of 6.5 ppl between 2015 and 2019.
Dan Turnbull, CMA director of markets, said: “While there is uncertainty over how global events will impact the price of oil, our report shows fuel margins remain high compared to historic levels despite lower prices at the pump in recent months.”
Simon Williams, head of policy of the RAC motoring body, said: “Drivers will be concerned to hear that retailer margins on fuel are still above where they have been historically and that competition remains weak.
Edmund King, president of the AA, said: “Once again, the CMA has exposed boosted margins and profits from petrol and diesel. Road fuel is a critical part of consumer and family budgets. Increased fuel costs have a major influence on inflation.
Iain Hardie, of Petroineos, operator of Grangemouth said the Scottish plant faced global market pressures and the energy transition away from fossil fuels. “Refining is a globally competitive industry, and it is increasingly difficult for us to compete with bigger, more modern and efficient sites in the Middle East, Asia and Africa,’ he said.
Analysts say the long-term decline has a combination of causes, including global competition. Economically, sites have struggled to recover from the financial crisis of 2008 and the pandemic. Environmentally, prices on carbon emissions and plans to phase out petrol and diesel cars by 2030 are putting them under further pressure.
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