Phillips 66 to buy idle UK refinery site but will not restart operations

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US REFINER Phillips 66 has agreed to buy the site of the Lindsey refinery in Lincolnshire, UK following its closure last year – though the plant will remain idle.

Around 250 workers were kept on at the plant after 124 were made redundant last October. Instead of restarting Lindsey, which Phillips 66 has said is not economically viable, the company plans to integrate key assets such as storage facilities into operations at its neighbouring Humber refinery. Energy minister Michael Shanks said current employees’ jobs are “guaranteed” but only until the end of March. Phillips 66 did not confirm how many workers will be kept on beyond that date. The sale is expected to be completed in the first half of the year.

The decision follows Phillips 66’s announcement last month of a “gasoline quality improvement project” at Humber, part of a US$1.1bn capital allocation across its global refining operations.

Shanks said the agreement “marks the next step in securing an industrial future for the Lindsey site and workers who were badly let down by their former owners”. 

He added: “This will expand [Phillips 66’s] ability to supply fuel to UK customers, boosting domestic energy security and securing jobs.”

Unite general secretary Sharon Graham warned that without a commitment to restart the refinery, Phillips 66 risks turning Lindsey into a “glorified storage tank”. She said: “The government should be working with Phillips 66 to ensure this sale retains and creates jobs and helps safeguard the nation’s energy security rather than harming it.”

With a refining capacity of 111,000 bbl/d, Lindsey was the smallest of the UK’s five remaining refineries before it closed last June after owner Prax went into administration. Analysts said the refinery was generating cash before it closed, while the government blamed the closure on poor management from Prax.  

Elizabeth de Jong, CEO of the Fuels Industry UK trade group, welcomed the decision to save some assets from Lindsey and praised Phillips 66 as a “reputable and well-established operator” but warned the deal still confirms a loss of UK refining capacity.

“The closure of another refinery underlines how difficult domestic fuel refining has become in a hostile regulatory environment and losing that manufacturing capability is bad for the UK’s industrial and energy future.”

Paul Fursey, lead executive of Phillips 66 UK, said: “We recognise and deeply sympathise with how difficult the closure of the site has been for the workforce and the local community. This sale is the best way forward to secure jobs, bolster the local economy and encourage investment in the region.”