Private group seeks to buy UK’s third largest refinery

Private industrial investment company Klesch Group is emerging as a serious rival to Petroplus in the race to buy European refineries at heavily reduced prices, as international oil companies exit the sector in search of higher profits. Klesch foresees future profits by betting that refining margins will improve in line with long term economic growth in Europe.

The group has reportedly entered into exclusive negotiations with the French oil giant Total to buy their 221 000 bpd Lindsey refinery, which includes the Buncefield oil storage depot. Buncefield hit the headlines following an explosion in 2005.

The price is expected to be approximately £1.5 - £2 billion, thus making the move Klesch's biggest acquisition to date and putting it at the heart of the UK refining industry.

As well as Buncefield, which has approval to be rebuilt, the assets include the Lindsey refinery, built at Immingham, north east Lincolnshire in 1968. Lindsey is the third largest refinery in the UK, behind ExxonMobil's Fawley plant and the Stanlow refinery, recently purchased by Essar from Shell for approximately US$ 350 million. Other assets in the deal include a rail freight business, a plant in Preston and a back office in Watford.

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