BRITAIN’S third largest refinery is cutting capacity by half and cutting 180 jobs in a bid to ensure its long-term future.
French oil giant Total said it would reduce its workforce at the Lindsey Oil Refinery in north Lincolnshire from 580 to 400, as it posted a fourth quarter loss of more than $5bn.
Total has joined a growing list of oil and gas companies cutting jobs, following the halving of the price of crude oil since last summer.
The GMB trade union, which represents contractors on site, said the cuts were bound to have a knock-on effect.
Union officer Shaune Clarkson said: “If they are going to cut 180 jobs that is directly going to affect all the contractors on site who are my members.
“Most of the oil refineries in the UK are up for sale, because they tell us they can’t make a living out of it.”
The company said despite 10 per cent of European refinery capacity shutting in the past decade there was still overcapacity and Lindsey Oil Refinery was facing lower domestic sales “which dangerously threaten its profitability”.
In future the refinery will process five million tonnes of crude oil a year into products including diesel, petrol and kerosene – half of its current volume.
General Manager Jacques Beuckelaers said doing nothing was not an option, given worldwide overcapacity and the decline in demand for petrol and diesel.
“Lindsey Oil Refinery will be a smaller, but a higher converting and more profitable refinery,” he said
Cleethorpes MP Martin Vickers raised the job losses in the Commons with Business Minister Matthew Hancock. Mr Vickers said he and Scunthorpe MP Nic Dakin had been told the company faced closure, sale or restructuring.
He said: “Clearly they have chosen the best option that will give a long-term future to the refinery and secure 400 jobs. Matthew Hancock assured me that the Government would work with me and the company to do all it can to assist workers into new jobs and said that he would discuss this further when he visits the area in the near future.”
The UK Petroleum Industries Association, which represents the six major refineries in the UK, said the sector faced a “perfect storm” and was under “huge pressure”, a major factor being multiple UK and EU legislation, which was putting it at a “severe” disadvantage.
The United States has lower energy and feedstock costs because of the boom in shale gas and UK refineries are also facing growing competition from the Middle East and the Asia-Pacific region.
Last year the UK became a net importer of refined products including diesel for the first time in 30 years, following the closure of the Coryton refinery in Essex in 2012 and a drop in North Sea crude production.
UKPIA director general Chris Hunt said: “Our refineries are facing a number of challenges to remain competitive. However, a healthy refining sector is vital to meet UK consumers’ needs and for its contribution to the UK economy and resilience.”
Workers affected by the decision will be offered redeployment as well as voluntary early retirement.