Oil Refining Sector

Martin Vickers Excerpts

Thursday 11th December 2025 Westminster Hall

[Martin Vickers (Brigg and Immingham) (Con)]

I beg to move,

That this House has considered the future of the oil refining sector.

It is a pleasure to see you in the Chair, Mr Western. I am pleased that this debate has attracted considerable support, particularly from north of the border, and that today The Times had a timely editorial on this issue.

My constituency is in northern Lincolnshire on the south bank of the Humber, which has been christened “the UK’s Energy Estuary”. In recent years, the Humber has become a world-leader in the offshore and renewable energy sector—something we are proud of locally. However, while the Humber is full of opportunity for offshore and renewable energy and will play a significant role in the UK’s net zero efforts, we must not overlook the UK’s carbon energy needs as we make the transition to cleaner energy sources. We must face the fact that a significant portion of our total energy consumption still comes from oil, gas and coal and will continue to do so. The UK’s annual total primary energy consumption is around 130 million to 140 million tonnes of oil equivalent; fossil fuels made up roughly 79% to 81% of that in the year 2022-23.

The Humber has played a significant role in ensuring that that demand is met. Until the crisis at Lindsey oil refinery in my constituency earlier this year, the Humber could boast of producing a third of the UK’s refined fuel, with two of the UK’s six major oil refineries based in the Humber region. Now, as we approach the end of 2025, only four operational refineries remain in the UK, following this year’s closure of Grangemouth, with significant job losses, and the uncertainty at the aforementioned Lindsey refinery where over 400 people are employed. Even more striking is the fact that the number of refineries is down from 18 in the 1970s.

Sadly for the oil refining sector, most people do not even realise that it exists or appreciate its importance, yet the sector is a vital part of the UK’s energy security. A number of our crucial sectors rely on it, including the transport industry and defence sectors. All Members will know that oil refineries produce products that are essential for our critical energy needs, such as petrol, diesel, jet fuel and fuel oil. The Lindsey refinery has a capacity equivalent to around 35% of British petrol consumption and 10% of British diesel, and also supplies aviation fuel to Heathrow via pipeline.

Yet the House of Commons Library states:

“Refinery output in 2024 was 48 million tonnes. This was 55% below the 1973 peak.”

Output in 2024

“was around 14% below levels from the late 2010s and more than 40% below output from the start of the century.”

That is worrying considering that refineries supply 47% of the UK’s final energy demand, as 100% of aviation, 97% of road and 61% of rail transport still relies on liquid fuels. The refineries also support 100,000-plus jobs across the UK, with 4,000 directly in the refineries. We collect £37 billion annually in tax—that is duty and VAT—from them, and they deliver low-carbon fuels that have an impact equivalent to removing 3 million cars from the road each year. That is not to mention the fact that ours are among the lowest-carbon refineries globally—in fact, 80% of the UK’s top import partners have a higher carbon intensity—yet despite their importance we have seen the closure at Grangemouth and the uncertainty at Lindsey.

What does the future hold? UK oil refineries continue to face a number of challenges. Of course demand for refined products will decrease as the country continues to reduce its emissions in accordance with the legally binding commitment to achieve net zero emissions by 2050, though that target may change. Moreover, energy is the single largest cost of operating a refinery. The industry faces high energy costs, and carbon costs negatively impact the competitiveness of UK refineries. UK refineries are essentially competing with one hand tied behind their back while their competitors pay little or nothing in carbon costs. That is on top of the issue of unequal access to decarbonisation opportunities.

Our route to lower emissions must not come at the price of deindustrialisation or at the expense of our energy security. As an editorial in The Times today points out, some in the Government are so hostile to fossil fuels and so beholden to the green ideology that they are willing to sacrifice our future income and tolerate the jobs that are being lost. We must put the national interest first. Moreover, our climate targets are still some way off, so in the meantime we must continue to rely on the products that refineries produce.

The sector remains vital for today’s economy, yet our refineries are closing. We must realise that closing UK refineries does not reduce demand; it merely shifts production abroad. That, of course, often leads to higher emissions. We are thereby exporting jobs outside the UK while failing in our efforts to cut emissions. Losing further capacity would therefore leave the UK increasingly dependent on imports and the unpredictability of global politics, relying on other nations that often have weak rules on environmental protection, labour rights and safety.

Moreover, once a refinery closes, it does not return. The skills, infrastructure and investment are lost permanently. We must also consider the impact on the local economy and local people that closures cause. At Lindsey, over 400 people are directly employed on the site, and well over 1,000 rely on it through the supply chain. As North Lincolnshire council said in its position statement on Lindsey oil, the implications of any closure of the site will have far-reaching consequences for the local economy and the people employed directly and indirectly.

The council has stated that the potential closure of the refinery will have a significant impact on local market confidence, particularly following the turmoil at British Steel earlier this year. As such, failure to properly support the businesses impacted could multiply exponentially the impact of the closure. Moreover, the south Humber bank, where the site is located, relies on the interconnectivity of its industrial supply chains. As such, the refinery is not an isolated operator but an integral node in a wider network that supplies products to downstream users, and disruption at one site can quickly ripple across the regional economy.

These integrated clusters work in tandem, reflecting the modern industrial model, and our economic resilience relies on the system being maintained, thereby ensuring long-term industrial sustainability in the UK. I note the Scottish Affairs Committee’s conclusions on the handling of Grangemouth, which can be found in the Committee’s recently published report on Scotland’s oil and gas industries. I am sure the Chair of the Committee, the hon. Member for Glasgow West (Patricia Ferguson), will delve more deeply into the detail of the report, though let me quickly say now that the report stated that both the UK and Scottish Governments should have acted sooner to prepare for the crisis in Falkirk.

[Euan Stainbank (Falkirk) (Lab)]

I hear the hon. Member on the strategic importance of oil refineries; we have seen it in Grangemouth for over 100 years. Back in February 2024, in response to a question from the former Member for East Lothian, the right hon. Member for Richmond and Northallerton (Rishi Sunak), the then Prime Minister, described the closure of Grangemouth refinery as “obviously a commercial decision”. Does the hon. Member for Brigg and Immingham (Martin Vickers) agree with that characterisation by the former Prime Minister, who was at the time his party’s leader, given that he is describing—and I agree with him—the strategic role that oil refineries play in his community?

[Martin Vickers]

The hon. Member makes an important point: it is the case that such decisions are not solely commercial; the Government must consider, more widely, energy security and the impact on the economy.

In preparation for this debate, I received representations from various interested parties that are dependent on the oil refining sector. They have outlined their concerns, some of which I have mentioned already, and the solutions they would like to see put forward. One issue that has been mentioned to me is the expansion of the scope of the carbon border adjustment mechanism to include oil refineries’ products. As Members may know, the CBAM is a tax levied on goods at the border based on their carbon content. Expanding the CBAM to products from oil refineries based overseas, as the Government proposed in their autumn Budget, would enable domestic oil refineries to remain competitive and stop them fighting with one arm tied behind their back.

I mentioned that the refining sector is subject to ever-increasing regulatory burdens and carbon pricing. Sadly, the impact of net zero politics, particularly the UK emissions trading scheme, is driving rapid and sustained deindustrialisation of the British economy. Refining receives substantially lower free allowances under the scheme compared with other industries, such as steel and cement, and ETS costs are one of the highest expenditures in a refinery’s operating budget. Competitors in other regions do not face those costs, which seriously damages the competitiveness of UK refineries. We must realise that the ETS damages our energy security and should be urgently repealed. Longer-term solutions may include bringing refined products fully into the UK CBAM or ensuring that the UK retains control over refineries in any future UK-EU carbon market linkage agreement. If we do not want to let this issue get any more out of control, we must act now.

Before concluding, I refer back to the situation at Lindsey oil, because the company is in administration. We have a situation in which FTI Consulting, acting on behalf of the official receiver, is engaged in discussions with potential buyers and investors. Those talks are rightly confidential, and when questioned, Ministers have repeatedly said that they are awaiting the recommendations from FTI. That inevitably feeds speculation through the grapevine that angers employees and their union representatives. I have held meetings with two consortia that are interested in buying the whole site and continuing operations, and the leader of North Lincolnshire council has held discussions with a third. Do the Government support a deal that would retain the refinery complete? Until now there has been no answer. I again ask the Minister: do the Government favour that option and, if necessary, would they provide some support?

Have the Government instructed FTI to prioritise jobs? A letter from Unite the Union to the Secretary of State throws that into doubt. In the letter, Unite says:

“In this vein you informed me and the Unite reps for the refinery on two occasions that you had advised FTI that bids which save the jobs should be prioritised and that if needed, there could be government money for a viable bid which saved the site.”

Is Government money available? The reply seems to throw doubt on all of that. The reply from the Minister for Energy to Sharon Graham at Unite says that the Government

“have made repeatedly clear that long-term and sustainable employment is a priority for the Government”,

but that does not necessarily mean it is a priority that has been passed on to the official receiver.

At a meeting with me and the hon. Member for Great Grimsby and Cleethorpes (Melanie Onn), the Minister for Energy assured us that if the worst came to the worst and the refinery were to close, or there were to be large- scale job losses, one option would be for the Government to work with MPs, local authorities and other agencies to form a taskforce to consider what help and support would be available to revive the local economy. Is that offer still open? My understanding is that the Government have said that there will be no further redundancies until the end of March, which I welcome. Could today’s Minister clarify whether the Government are meeting the cost of that, or whether the costs will be taken into account by the administrators and the amount available to creditors adjusted accordingly?

The future of not just Lindsey oil but the whole oil refining sector is at stake. The Government must review their current position and act to secure the industry for the future.

[Several hon. Members rose—]