Commodity trader Glencore Plc. will replace its rival Trafigura Group as the supplier of crude oil to a key refinery in the UK.
The company won a process to supply the Lindsey refinery, which is operated by Prax Group Ltd., according to a person familiar with the matter. The deal follows another last month in which a joint venture between Glencore and Indonesia’s PT Chandra Asri Pacific purchased an oil refinery and chemicals site in Singapore.
With much of Europe’s refinery infrastructure aging, owning those assets has become less appealing to many oil companies in recent years, but supplying them with barrels can still be lucrative.
A significant chunk of the crude that the refinery processes comes from grades that help set the global crude oil benchmark — Dated Brent. Any company that supplies Lindsey is therefore assured of a buyer for a set volume of cargoes that it owns linked to Dated Brent. The benchmark is made up of five grades pumped in the North Sea, as well as barrels exported from the US Gulf coast.
Lindsey can process up to 113,000 barrels a day of crude, according to Prax’s website. People familiar with the matter said that Trafigura declined to continue its business with Prax.
Prax previously declined to comment, and didn’t immediately respond to a second request Monday. Glencore didn’t immediately comment.
Reuters reported the news earlier.