Husband-and-Wife Team’s Bold Oil Refining Ambitions Hit a Snag

In 2020, amidst challenges in selling the Lindsey oil refinery in England, French oil giant TotalEnergies SE saw an unlikely pair—a husband and wife with no prior refining expertise—step forward as buyers. Sadly, their endeavor culminated in a significant failure this week.

On Monday, the UK issued a liquidation order for Prax Lindsey Oil Refinery, the company that owned the facility, prompting an urgent response from the country’s Insolvency Service to try and rescue the site. This news took many by surprise, including government officials, employees, and the transportation firms supplying the plant’s fuel. Even commodities powerhouse Glencore Plc, which had been delivering crude oil to the refinery, was caught off guard.

The liquidation is already causing turmoil in supply chains, with distributors racing to secure alternative fuel sources throughout the UK. This situation adds strain to an already limited refining system, heightening the possibility of increased demand for imported fuels. This comes on the heels of the recent closure of Scotland’s sole fuel production facility, Grangemouth, further underscoring risks to the country’s energy security.

Established in 1968, Lindsey was the smallest operational refinery in Britain. Its potential shutdown reflects the challenges faced by many smaller plants across Europe that struggle to remain viable in a market dominated by large trading firms and oil conglomerates.

The sale of Lindsey by Total took place during the pandemic, when demand for oil drastically decreased, leading to the shutdown of several European refineries. At that time, the deal appeared advantageous: Total could divest from a struggling asset, while Winston Soosaipillai, known as Sanjeev Kumar, and his wife Arani aimed to elevate Prax into a fully integrated oil enterprise.

Fast forward five years, and by 2024, the refinery had accumulated losses exceeding £501 million ($688 million), based on its latest financial filings with Companies House.

Other Assets

This refinery accounted for about 7% of the UK’s fuel consumption according to recent reports and supplied fuel to Heathrow Airport and numerous filling stations.

While Prax Lindsey and related assets are undergoing liquidation, its parent company, State Oil Ltd., is currently in administration that aims to rescue struggling enterprises rather than shutting them down. Some segments of the operations, such as Prax’s retail brand Harvest Energy, remain active.

The fallout from the liquidation, attributed to decisions made by Prax, was further complicated by poor communication.

Energy Minister Michael Shanks criticized the company for failing to notify stakeholders of its financial issues, which had become evident as early as April.

Prax Lindsey suddenly halted operations on Friday without advance notice, bringing fuel distribution to a standstill, according to one distributor.

A representative from Prax’s London office, who chose to remain anonymous due to the sensitive circumstances, mentioned that communication from management had significantly waned. Similarly, Glencore was left uninformed about the challenges faced by Prax, despite continuing to supply crude oil during that period.

Attempts to contact the former owners for comment were unsuccessful.

If Lindsey permanently closes, the UK will have only four operational refineries left—down from a peak of 18 in the 1970s—highlighting the country’s growing reliance on fuel imports. Lindsey processed under 100,000 barrels per day, while the nation consumed over 1.3 million barrels daily in the same timeframe. The shutdown of Lindsey would necessitate an additional 30% fuel importation, according to industry data compiled by Bloomberg.

Humble Beginnings

The decline of the refinery has brought scrutiny on the couple and their ascension to control a facility deemed critical national infrastructure by the government, as well as who will bear the responsibility for decommissioning expenses.

Prax originated in the charming town of Weybridge, located to the southwest of London. After pursuing accountancy studies at the University of Kent, the Soosaipillais acquired their first gas station in 1999 while still in their twenties. The following year, they launched State Oil as a supplier, wholesaler, and retailer of petrol and diesel.

They expanded their business by acquiring additional gas stations and ventured into oil and fuel storage, trading, and jet fuel. In 2015, Prax bought Harvest Energy from commodities trader Trafigura Group and Irish entrepreneur Denis O’Brien in a deal financed by debt, securing a reliable fuel supply.

A partnership with Total at gas stations in 2019 solidified relationships before the Lindsey acquisition a year later. Prax bought it for $167 million, completing the transaction in March 2021—approximately one year after the peak of the Covid-19 crisis that severely impacted demand.

In 2023, Prax made another unexpected acquisition by purchasing Hurricane Energy, a North Sea exploration and production company, with Sanjeev Kumar as chairman and CEO and Arani as Chief Human Resources & Corporate Officer, overseeing around 1,500 employees. That same year, Prax also acquired Total’s stake in the Natref refinery in South Africa, describing it as its first entry into the African market.

Throughout this time, crude and fuel prices have fluctuated dramatically. The Covid-19 pandemic triggered an unprecedented drop in oil consumption in 2020, but by 2021, the markets rebounded sharply due to pent-up demand. Despite the instability, Prax Lindsey continued its operations while many others shut down.

The parent company reported a loss of $28.7 million for the year ending February 2024, according to its latest published accounts. Additionally, a $5.2 million dividend to the owners last year has drawn scrutiny in the wake of the refinery’s collapse.

On Monday in Parliament, Shanks disclosed that Energy Secretary Ed Miliband had a meeting with Soosaipillai on May 13 to discuss the refinery’s commercial challenges. Soosaipillai reassured Miliband that closure was not imminent, only to later retract that statement a week ago, indicating that the company could no longer sustain operations. Shanks urged the refinery’s “wealthy owner” to “step up and provide appropriate compensation for the workers.”

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