Phillips 66 has agreed to buy the collapsed Prax Lindsey oil refinery out of administration, but revealed plans to integrate the operations into a neighbouring site in north-east Lincolnshire.
The Insolvency Service said that around 250 staff employed at the refinery in North Killingholme will have their jobs guaranteed until the end of March.
But the buyer could not provide any commitments as to how much of the workforce will be retained once the sale completes.
Phillips 66 said it had decided to not restart standalone refinery operations at the Lindsey site because it was not “viable in current form”.
Phillips 66 said it had decided to not restart standalone refinery operations at the Lindsey site (Anna Gowthorpe/PA)
It will instead integrate key assets, including storage and other infrastructure, into the neighbouring Humber Refinery operations, which the company already owns.
A spokesperson for the company said: “While we understand the impact on Prax employees, at this stage we cannot guarantee how many new roles will be created, as we will require a different structure of workforce to operate those acquired assets which are integrated.
“Once our plans are finalised, we will communicate appropriately.”
Phillips 66 has about 1,000 employees at its UK subsidiary, and said the acquisition would support hundreds of jobs.
Production at the Lindsey site was stopped after its owner, Prax Group, collapsed into insolvency in June.
Paul Fursey, Phillips 66 UK lead executive, 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.”
The company said the acquisition will enhance operations at the Humber Refinery and improve the supply of fuel to UK customers.
The Government’s official receiver took control of the Lindsey operation after the collapse of its owner and a bidding process was launched.
It is one of only five large oil refineries remaining in the UK after the recent closure of the Grangemouth plant in Scotland.
Some 125 jobs were cut at the site following the administration.
Energy minister Michael Shanks said Phillips 66 was the “most credible bidder” in the Government’s process to find a buyer.
“This agreement marks the next step in securing an industrial future for the Lindsey site and the workers, who were badly let down by their former owners,” he said.
“Phillips 66 is an experienced and credible operator, and today’s sale agreement allows them to quickly expand operations at its neighbouring refinery, with all remaining staff guaranteed employment until the end of March.
“This will expand the company’s ability to supply fuel to UK customers, boosting domestic energy security and securing jobs – including hundreds of new construction jobs over the next five years.”
The leader of North Lincolnshire Council said the deal marked an important step forward after months of uncertainty but added that further assurances are needed from the government to protect jobs.
Rob Waltham said: “This is good news in what has been an incredibly difficult period for workers, their families and the wider community.
“It is positive that a serious investor with a strong track record in the UK is stepping in, and Phillips 66 is a respected local employer with a long-standing presence here in North Lincolnshire.
“But this is only part of the picture. There is more to do, and there are still important questions that need clear answers.”
Mr Waltham said: “I have been clear with ministers that we now need certainty – that includes clear commitments on employment for existing staff, clarity on any potential Tupe rights, and a better understanding of what this deal means for contractors who rely on the site for work.
“We also need greater transparency about exactly which assets have been acquired and what that means for future use of the site and surrounding infrastructure.”
He said: “This is a positive step, but the stakes remain high and government cannot step back at this point – these are skilled, high-quality jobs that matter to families in Lincolnshire and to the country’s energy resilience.”