Prax to the future: New general manager on an exciting era for refinery
Luc Smets is the new man at the helm of Prax Group’s ‘beating heart’ as pride pumps around a refinery once more.
LINDSEY Oil Refinery had been producing road fuel for 30 years when Prax’s first oil trade was completed as a back bedroom start-up back in 1999. Fast forward 22 years and an entire refinery is now in the hands of an entrepreneurial business that has evolved into a fully integrated operation.
The strategic South Humber Bank plant is seen as the missing piece as storage, distribution and retail sites were added on the remarkable journey.
And the independence and speed of movement were major attractions for Luc Smets - chosen to head up the sprawling 500-acre North Killingholme site by Sanjeev Kumar and his London-based team.
With more than three decades of petrochemical experience, having “grown up and been educated” in ExxonMobil where he spent 23 of those years, he then joined Gunvor - an early entrant as a trading business into the refining sphere.
And he believes a mix of both the corporate and the independent plant background - with insight into the differing cultures - will stand him in good stead as he plays a key role in the transition from Total to Prax.
“One of the main reasons I joined Prax is for the exciting journey, I now it is as I have done it before, the people are knowledgeable and are capable and are motivated, we have the right people on board.
“We have a company moving fast, decision lines are short - I have a Whatsapp group with the CEO - how faster can it go?!
“It is an entrepreneurial environment, he has his own money in the company. If you can justify a new opportunity to him, he is willing to invest even more. That’s a real asset, and you don’t have that in a big major. That’s nothing about Total, a very decent and good company, but it is the difference in how they kept the refinery to how Prax will, as the crown jewel and the beating heart. The shareholder has skin in it - he is so closely involved, it is his company, his money, his assets.”
It is his next of kin that give their initials to the name too, as that petroleum product dealmaker on the cusp of a new millennium. “The difference between trading and refining is very different, not just economic,” Mr
Smets said. “Prax approached me with the offer of the transition and integration into a trading environment. It was something like what I had done before, and what I’m very happy to do. It can bring a lot of challenges, but a lot of actual opportunities for the business and also the people.
“What makes the difference is the people.
They all have similar steel and concrete, it is all about the people. When I entered I was very pleased with the people I saw here. The first thing I did was talk to the people. My calendar was busy morning to evening to have one-toones with all the people I could. I want to understand the background, motivation and knowledge, their experience and how they look at the transition. I am positively surprised that people were really wanting this moment to happen, and I can understand that.”
Put up for sale by total in the Noughties it was then retained and restructured as part of a ‘Future in Total’ programme. How successful that was is hard to judge beyond name, and it started three general managers back.
Mr Smets said: “European refining is in decline, it is clearly a very difficult period for refineries to survive. All the oil majors are revisiting strategy, looking at where they want to be in the next 10 to 15 years. They are all global companies, and for one reason or another Total decided the UK and this refinery was not a major strategic part, and you see that in investment. It had done everything right to keep it going, but it was the making of new investment, to expand and evolve new business opportunities, that was clearly not happening any more. “Throughput went down, Covid did not help, but also, it was partly because a decision was made. Prax has a completely other view on this refinery, and I’m really happy for the people.”
While not quite as extreme, lines can be drawn to his move from Exxon in his native Belgium.
In early 2013 he was headhunted by Cypriot-registered Gunvor to head up the Antwerp refinery, which had just been acquired out of the liquidation of Petroplus. “It was very challenging because the refinery was in bad shape, a lot of people left and it went immediately into a major turnaround, a shut down of the whole refinery,” Mr Smets recalled. “I learned for the first time the very interesting marriage that can come out of a trader and refiner.
“LOR for Prax is first of all the missing piece in the supply chain, they already have very intensive representation in the UK, it is a home market and they have a lot of terminals, retail stations and logistics.
“It is very logical if you look at the model, and the broader deal. Strategically it is the beating heart of the supply chain - production capacity gives real leverage for a trading company, and it started as a trading company but now there is real integration.
“A trader wants to move product, store and then move at the right moment. For them capacity is important, and it has acquired a refinery and the first thing we have done is ramp up production and the more product the trader can make the better it is for the business model. It is opposite to the oil majors. “It is the beating heart of the supply chain, but also the jewel in the crown.”
Health and wealth are worth investing in then, surely. New capital was flagged last summer when the deal was agreed and now it is being realised.
“A lot of initiatives are being brought forward, things that were put on hold not judged important enough,” Mr Smets said.
“We are scrutinising all opportunities and all markets around us, and ready to really make it happen - and I can see it is going to lead us somewhere.
“Everyone understands a refinery is not making money if not producing, if there is more production we have the means to better beat the fixed costs.” The recently restored direct pipeline to London hinterland and on to Heathrow is seen as a huge bonus, so too rail into Warwickshire, a key industrial heartland on the doorstep of Birmingham, the UK’s second city. “Coming from a declining business, we are all of a sudden in a growing business we see a lot of opportunity around us, and that gives the highest level of satisfaction you can bring to people, Mr Smets said. “That’s what I see and that’s what I feel.
“Prax bought the refinery for the long term, and we see that with investment happening now.”
We have a company moving fast, decision lines are short - I have a Whatsapp group with the CEO - how faster can it go?!
Luc Smets