4 days ago
A $10bn oil empire in tatters: how Prax collapsed
Sanjeev Kumar Soosaipillai was as charming and upbeat as ever in September 2023 as he addressed investors at Prax Group's annual conference at the five-star Dorchester hotel on Park Lane, London.
'He gave a presentation about how everyone should be very proud,' one source at the event said.
But even the most optimistic in the audience could not avoid arching an eyebrow as Soosaipillai presented profit numbers that seemed off the chart. Some attendees were incredulous and left the celebrated Mayfair hotel with one thing on their mind: how could Soosaipillai possibly back up the figures?
The following day, Prax's executive committee convened for an off-site day at another luxury hotel – this time at the £2,000-a-night Fairmont hotel golf retreat on the outskirts of Windsor. To say that the gloss had come off Soosaipillai's sunny disposition was something of an understatement, as senior leaders grilled him on the previous day's profit number, which had even come as a surprise to some of them, according to one of those involved.
The company was facing 'challenging markets… which affected our financial performance', Soosaipillai would later disclose. What followed was 'Project King', an initiative where Soosaipillai temporarily handed over control of his empire to consultants from Deloitte, such was the parlous state of its finances.
One senior figure familiar with the situation said this led to the brutal axing of one in five staff to balance the books.
Soosaipillai was typically sanguine. He referred to the exercise as 'a journey of value creation and cost efficiencies to extract the benefits from our consolidated diversified business which has grown substantially over the past years'.
'But that was a little bit futile,' said the source. 'Because the biggest problem was the refining.'
Soosaipillai and his co-owner, wife Arani, have proven an enigma to outsiders after opening their first petrol station in St Albans with the help of an HSBC overdraft more than a quarter of a century ago.
The reclusive couple's empire unravelled in spectacular fashion last week when it declared bankruptcy after being pursued by HMRC for £250 million in unpaid taxes. Rumours abound that they have fled the country. 'Sanjeev Kumar Soosaipillai no longer works for the Prax Group' and 'Arani Kumar Soosaipillai no longer works for the Prax Group' were the automated emailed responses in response to efforts by The Sunday Times to contact them for comment.
Administrators are now in charge of Prax's parent; and the government's official receiver has seized control of the Lindsey oil refinery in Humberside — one of only five remaining in the UK that keep the country running.
And it can this weekend be revealed that Britain was just a whisker away from handing over another major strategic asset to the couple. Prax had exchanged contracts with French oil major Total to acquire its interests in the West of Shetland gas fields.
This included the Shetland Gas Plant, which is responsible for producing about 8 per cent of the UK's gas needs, enough for two million homes, according to Total. The deal had been due to complete in the final week of June, just days before administrators and receivers intervened.
With their multi billion-pound empire in tatters, ministers have called for them to 'put their hand in their pocket' to pay for the huge bill that will now otherwise fall on taxpayers. The Insolvency Service has ordered an investigation.
The couple's refusal to put their side across is, in their defence, consistent with how they have behaved over the years. Although regulars at private industry events, the husband and wife team – both 52, and who met while studying accountancy at the University of Kent – have shunned the media spotlight. Their preference has been to lock themselves inside a lavish 15,500 square foot mansion in a private gated community at St George's Hill, Surrey, or behind the tall brick walls that surround their head offices in nearby Weybridge.
Sanjeev and Arani's first foray into oil came in 1999 when they opened a forecourt in Hertfordshire. Extra sites were added, in part funded by remortgaging their home. By 2005 they had added an oil storage site in Dagenham, east London, and thereafter carved out a niche in blending diesel, before diversifying into gas oil, kerosene and petrol.
Armed with cheap bank loans, the Prax group of companies snaffled unwanted assets from oil majors such as BP, Total and Shell.
A landmark deal came in 2015 when Prax landed the debt-fuelled takeover of Harvest Energy from commodities trader Trafigura and the Irish magnate Denis O'Brien for a cut-price $23 million. Harvest supplied a tenth of Britain's road fuel and owned forecourts of its own, but low oil prices had hit the group's bottom line, allowing the Soosaipillais to pounce.
The pair's ambitions went well beyond the UK. In 2016, Prax swooped on AIM-listed oil explorer Tethys Petroleum, thrusting it into a legal row over the rights to thousands of barrels of oil that culminated with armed guards preventing oil tankers from leaving a Tethys base in Kazakhstan. By 2024, Prax could justifiably boast of an empire upon which the sun would never set, with interests as far east as Malaysia and southeast China, across the Middle East and Africa and over to Texas. The company made a virtue of being 'vertically integrated' — that is, owning a toehold in every bit of oil supply, from wells to refineries to petrol stations. It was, in effect, a mini oil major.
Throughout this time, and flanked by his wife, Sanjeev retained an iron grip on his company. 'He is energetic, charismatic, and very charming,' said one person that worked with him. The problem was that he was either unable or unwilling to delegate, they said.
'I was surprised how he surrounded himself with less capable people,' the person added. 'He wants to do everything. The answer would always be: 'I'll fix it.''
This management style yielded results in the early years, but caused complications as the Prax group grew and grew.
Located in North Killingholme, the pastel-painted tanks of the Lindsey oil refinery provide a much-needed dash of colour to the otherwise drab Lincolnshire flatlands on the south bank of the Humber Estuary.
Lindsey processes about 113,000 barrels of crude oil per day, equivalent to approximately 7 per cent of the UK's demand for petrol, diesel and aviation fuel.
Prax's acquisition of this site from French giant Total in 2021 would define the Soosaipillais as a major player in the UK energy market.
The acquisition would also prove to be the couple's undoing.
The Soosaipillais knew Total well by this point, having struck a deal to operate petrol stations under the French company's brand in 2019. They paid $167 million for Lindsey, including the Fina pipeline, which runs through the east of England, and an oil storage terminal.
The Lindsey deal completed in March 2021. Within a year, Prax was toasting not only smashing through the $10 billion revenue barrier, but fat profit margins as oil prices soared in the wake of Russia's full-scale invasion of Ukraine in February 2022. It allowed the couple to book a $500 million paper profit from their investment in the refinery.
But as oil prices normalised, profit margins narrowed and may have even been negative, according to some industry experts.
Whether it was poor due diligence, or inexperience in refining, the poor state of the refinery meant that it was not long before Lindsey turned from goldmine to millstone.
The Soosaipillais put the refinery into a 'turnaround' – a standard practice that takes place every few years to overhaul and refurbish a plant. It is a major undertaking and requires careful planning to minimise the period of outage.
Prax issued a press release last month hailing Lindsey's turnaround, which it said had taken place earlier in 2025. Bosses said the successful overhaul was a 'testament to the dedication, meticulous planning and safety mindsets of everyone involved'.
Multiple sources dispute this version of events, however. They said that the turnaround actually commenced in March 2024 and dragged on until September.
In the northern hemisphere, turnaround programmes typically occur in the spring or autumn. This is so they miss inclement weather during the winter, and avoid the summer, when oil prices are typically higher in response to 'driving season' in the US, when there is an increase in motorists using their cars.
Industry sources said that a turnaround would typically take 45 days, meaning the March 2024 start date would have been perfectly timed, with reopening commencing in mid-April.
Sources close to the company dispute the 45-day average, and pointed out that Lindsey refinery was in a poor state of repair, meaning that it was always likely to take longer.
Nevertheless, some say that the effective four-month shutdown of Lindsey was a hammer blow to the wider Prax group. During this time, cashflows dried up. Given the size of the refinery, this had implications for the wider group.
Not even a two-year offtake deal with FTSE 100 commodities giant Glencore, agreed in July 2024 on more favourable terms than the previous contract with Trafigura, could stop the difficulties mounting.
Dealmaking became difficult at the same time. Prax agreed to acquire Shell's 37.5 per cent stake in a major refinery outside Berlin that was majority-owned with Kremlin-controlled Rosneft, only for the deal to collapse after the UK firm's financing fell through late in 2024, according to a source familiar with the deal.
By May this year, the government had finally cottoned on to the travails of a group that owned a major piece of Britain's energy infrastructure.
Energy secretary Ed Miliband summoned Soosaipillai into Whitehall for an explanation. Yes, it had been far from smooth-sailing, but Prax was not in peril, he was told. In fact, Soosaipillais is reported to have told Miliband the group was planning future investment.
Whether or not Soosaipillai discussed his company's towering tax bill with Miliband is unclear.
But it was ultimately his and his wife's undoing. Officials from UK Government Investments stepped up their preparations to take control of the Lindsey refinery in the week commencing 23 June. Special managers from FTI Consulting, acting on behalf of the government's Official Receiver, began taking control of the business on Friday, 28 June.
Meanwhile, insolvency practitioners from Teneo were appointed as administrators to Prax's parent entity, State Oil Limited.
So what next for Prax? On Friday, it emerged that FTI had struck a deal with Glencore for taxpayers to foot an unpaid bill for crude oil.
That means that its consultants, working on behalf of the government's Official Receiver, are now free to consider sales options for the Lindsey refinery and associated companies.
Previously, Glencore had security over the site as part of its offtake agreement with Prax. Some sources questioned whether Lindsey would find a buyer, given its relatively small size. It is the smallest of the UK's five oil refineries, after all. That said, next-door neighbour Phillips 66, which operates a refinery double its size, could be tempted.
Teneo has a far larger job. It is now preparing the rest of Soosaipillai's sprawling network of companies for sale. It is understood that Teneo was first contacted by the company just four days before it collapsed into bankruptcy. Originally, the consultancy was asked to assist with raising new financing. Within hours, Teneo's team realised they were dealing with a group that was not financially viable.
Sanjeev initially worked with Teneo before being suspended from his post by Prax's non-executives ahead of the group's insolvency. Teneo is understood to have opened a forensic investigation into Soosaipillai's actions as a company director.
The likes of Lancaster offshore oil field west of the Shetland basin, bought as part of the takeover of AIM-quoted Hurricane Energy for £250 million in early 2023, is likely to attract suitors. Control of Total's Shetland assets, so close to becoming part of the group, have reverted back to the French oil giant.
Likewise, the company's portfolio of petrol stations. Among the potentially interested parties are EG On The Move, EG Group and MFG. Sources said the preference was to sell the sites as one job lot.
'Twenty-five years on from the birth of Prax, we have the opportunity to set our business up for the next wave of growth and success,' Soosaipillai wrote in the company's 2024 annual report. 'Across Prax, we are embracing this opportunity with out classic 'can do' spirit.'
When it comes to Prax, such sentiment only gets you so far, it would seem.
