Prax concludes purchase of Total’s UK refinery, downstream assets

March 2, 2021
Prax Group has completed its proposed acquisition of Total SE’s UK downstream business, including subsidiary Total Lindsey Oil Refinery Ltd.’s 109,000-b/d refinery in North Killingholme, Immingham, Lincolnshire, and associated logistics assets.

Prax Group (also known as State Oil Ltd.), a London-based global independent trading, storage, distribution, and retail firm, has completed its proposed acquisition of Total SE’s UK downstream business, including subsidiary Total Lindsey Oil Refinery Ltd.’s 109,000-b/d refinery in North Killingholme, Immingham, Lincolnshire, and associated logistics assets (OGJ Online, July 27, 2020).

Finalized on Mar. 1, the purchase includes Lindsey refinery, the Finaline pipeline, and the Killingholme loading terminal, together with shares in joint venture (JV) operations, Prax said.

“Our long-term strategy is to be fully integrated across the oil value chain from upstream to downstream, and today marks the beginning of a new chapter for the Prax Group,” said Sanjeev Kumar, Prax’s chief executive officer.

“The acquisition of [the Lindsey refinery] is a natural progression for [us], providing the opportunity to integrate the refinery and its associated product flows into the company’s UK distribution and retail footprint, which operates under the Harvest Energy brand. This will create unique opportunities for synergies with existing Prax-owned assets, as well as demonstrating our ongoing commitment to building a reliable supply chain to meet the needs of our customers for many years to come,” Kumar added.

The completed sale follows the late-July 2020 agreement between Prax and Total UK Ltd. under which Prax Group agreed to buy all activities of Total Downstream UK Ltd., that— in addition to the refinery, pipeline, and loading terminal—includes Total’s shares in the following JVs:

  • Hertfordshire Oil Storage Ltd., 60%.
  • Associated Petroleum Terminals Ltd., 50%.
  • Crude Oil Terminals Ltd., 50%.
  • Humber Oil Terminals Trustee Ltd., 50%.
  • Warwickshire Oil Storage Ltd., 50%.

Neither Total nor Prax Group disclosed a value of the deal.

Refinery overview, future

Total’s divestment of the Lindsey refinery follows its 2015 major investment to modernize and streamline operations at the site as part of the company’s broader plan to restructure and restructure its European refining businesses to ensure long-term survival by innovating and adapting to shifting global and regional demand trends (OGJ Online, Aug. 7, 2017; July 7, 2017; Apr. 16, 2015).

Total’s completion of the first phase of its complex restructuring program in 2016 at Lindsey involved reducing crude processing capacity by about half from its previous capacity of 200,000 b/d and work to simplify and improve overall efficiency and conversion ratios to safeguard Lindsey’s ongoing competitiveness (OGJ Online, Oct. 11, 2017).

Resulting in cessation of processing activities at the refinery’s crude distillation unit 1 (CDU1) and other stage-1 units, the project also improved furnace operations and operating efficiency, as well as enabled full-production capacity at CDU2.

The operator also previously announced two projects at the Lindsey refinery planned for 2019-20 that were to involve adaptations to the manufacturing site’s hydrodesulfurization and fluid catalytic cracking units to increase production of cleaner, lighter fuels.

In addition to implementation of digital technologies that have increased available capacity of processing units to 97%, Total’s previous investment in the refinery’s fluid catalytic cracker has enabled reduction of sulfur in the site’s diesel production to less than 10 ppm.

The refinery also began the process in 2018 to modify an unidentified unit to improve quality of its production in a project on which engineering, procurement, and construction was to be completed by yearend 2020.

Upon closing the transaction, Prax said acquisition of the refinery will bring about new investment, underlining the operator’s determination to support the local economy and the wider community as it continues to explore new business opportunities as part of its long-term growth strategy.

While Prax confirmed appointment of Luc Smets as the refinery’s new general manager, the company did not disclose specific details regarding the nature of new investments it plans for the manufacturing site.

Currently, the Lindsey refinery processes more than 20 different types of crudes to produce more than 7 million tonnes/year of finished products—including gasoline, diesel, bitumen, fuel oil, and aviation fuels—which are distributed across the UK and transported abroad via sea, road, rail, and pipeline.

Crude supply agreement

Alongside announcing its completed purchase of Total’s UK downstream assets, Prax also confirmed it has finalized an exclusive crude oil and feedstocks supply arrangement with independent commodity trader and logistics firm Trafigura Group Pte. Ltd.

As part of the Mar. 1 agreement, Prax will purchase the entirety of its required crude oil and refinery feedstocks for the Lindsey refinery from Trafigura, which will use its global reach in international oil markets to source the optimal range of crude grades and other feedstocks for the site, Prax and Trafigura said in separate releases.

“This arrangement is an important step in [Prax’s] plans for the long-term growth of the refinery, and it will pave the way to further strengthen our long-term relationship with Trafigura [as well as] provide operational and planning flexibility, helping us to continue to deliver an excellent level of service to our customers,” Kumar said.

Additional details relating to the supply agreement will remain confidential, the companies said.