The UK’s competition watchdog has turned its guns on oil refiners, pointing to the fat margins they are making as part of an investigation into why fuel prices are so high.
The Competition and Markets Authority said it has “found cause for concern in the growing gap between the price of crude oil when it enters refineries, and the wholesale price when it leaves refineries as petrol or diesel”.
The war in Ukraine has exposed the lack of capacity in Europe, where Russia is a refining powerhouse. Increased demand for non-Russian oil has stoked prices elsewhere. Shell this week said it expects its refining profits to jump by as much as $1.2bn (£1bn) this quarter.
About a quarter of petrol and 57% of diesel used for road fuel in the UK in 2021 was imported via refineries overseas. Here are six of the biggest domestic refineries.
This facility at Ellesmere Port in Cheshire directly employs 900 staff and supplies 16% of all road transport fuels. There have been concerns in government over the state of its finances and documents filed at Companies House show that annual losses at the company behind Stanlow, Essar Oil (UK), deepened from $221m to $321m in 2021. Its auditors have raised concerns over the health of the company. Essar is owned by brothers Shashi and Ravi Ruia, the Mumbai tycoons whose empire spans shipping, oil, metals and mining. Their wealth was estimated at $2.2bn by Forbes last year, and the Ruia mansion is said to be one of the five most expensive homes in Delhi.
The refinery is located on the Firth of Forth in Grangemouth, Scotland where refining has taken place since 1919. About 2,000 people are employed at the site including 600 within the refinery itself. It is owned by Petroineos, a joint venture formed in 2011 between the state-owned Chinese oil giant PetroChina and Ineos, part of the billionaire Jim Ratcliffe’s petrochemical empire. Earlier this year, City sources said PetroChina is keen to sell its stake after losses grew to £89.9m in 2020, from a loss of £26.1m in 2019. Ratcliffe, who is worth just over £6bn according to the Sunday Times, relocated to tax-free Monaco in 2020. He made a £4.25bn bid to takeover Chelsea football club earlier this year but was not successful. The tycoon has poured his wealth into football clubs in Nice, near Monaco, and Lausanne in Switzerland. He also owns the fashion brand Belstaff and is creating a rival car to the Land Rover.
The North Lincolnshire refinery processes crude largely supplied from the North Sea. It opened in 1968 and now employs about 1100 workers. It is owned by a subsidiary of ConocoPhillips, the American multinational based in Houston, Texas. The $112bn behemoth’s shares have jumped 45% over the past year and its profits have increased nearly six-fold to $5.8bn in the first three months of the year, up from $1bn in the same period last year. A chunky 46 cents a share dividend was paid out last month. ConocoPhillips is run by the oil industry lifer Ryan Lance, who is also a board member of the National Fish and Wildlife Foundation. Lance, who grew up in Montana and began his career in the oilfields of Alaska, saw his pay slip 15% last year, but still landed $24m, 133 times more than the average ConocoPhillips employee.
The south Wales refinery has about 500 employees and handles 270,000 barrels of the black stuff a day, turning crude into end products such as diesel, jet fuel and heating oil. Texas’s Valero Energy bought the operation from Chevron in 2011 in a £447m deal. Valero is worth $43bn and its shares have rocketed 35% as energy stocks have boomed this year. In April it told Wall Street its quarterly refining margin had more than doubled to $3.21bn from a year earlier. In 2019, a $22m payday landed the chief executive, Joe Gorder, on the shareholder advocacy group As You Sow’s annual report of America’s “100 most overpaid CEOs”.
In March 2021 France’s Total oil group sold the Prax Lindsey refinery in north Lincolnshire to Prax, a unit of a little-known outfit headquartered in Surrey called State Oil, which has expanded rapidly. Its revenues grew nearly tenfold between 2010 and 2020. The company’s controlling party, Winston Soosaipillai, who goes by his middle names of Sanjeev Kumar, has almost no public profile.
The Fawley refinery, the largest in the UK, supplies a sixth of all petrol to garage forecourts and a fifth of all airline fuel used nationally. Located in Hampshire, it has been owned by Esso, the trading name for ExxonMobil, for nearly 100 years. The Texas-headquartered multinational is worth $363bn and is the largest direct descendant of Standard Oil, the company co-founded by America’s first billionaire, John D Rockefeller. Exxon racked up its highest profits in seven years last year, at $23bn. The company paid chief executive Darren Woods $23.6m last year, up from $15.6m in 2020. Woods also received a $3.1m cash bonus. In May, subcontractors at Fawley went on strike over pay.