Adds energy department minister's comments in paragraphs 5-6, 9-10

By Shadia Nasralla

LONDON, June 30 (Reuters) - Britain's Lindsey oil refinery has begun insolvency proceedings, putting hundreds of jobs at risk and potentially increasing the country's reliance on fuel imports just weeks after its Grangemouth refinery stopped processing oil.

Lindsey is one of six remaining oil refineries in Britain, according to the U.S. Energy Information Administration, and employs around 420 people, according to FTI Consulting, the refinery's special manager through the insolvency process.

Lindsey, with the capacity to refine 113,000 barrels per day, according to the website of its owner Prax, has been placed under a winding-up order alongside Prax Storage Lindsey Limited and Prax Terminals Killingholme Limited, the government said on its insolvency service website.

"There have been longstanding issues at the refinery," energy department minister Michael Shanks told lawmakers in parliament.

"We repeatedly asked them ... what the financial gap was to work out whether the government could help bridge that gap, but the company were unable to share that basic information," he said. "The company has left the government with very little time to act."

In a written statement earlier, the government said it was writing to the Insolvency Service to demand an immediate investigation into the conduct of the company's directors, and the circumstances surrounding the insolvency.

Prax, led by Chairman and CEO Sanjeev Kumar Soosaipillai, could not immediately be reached for comment. It bought Lindsey from TotalEnergies TTEF.PA in 2021 for around $168 million, according to a Prax presentation.

Shanks said the refinery failed to turn a profit since the purchase, losing around 75 million pounds ($102.86 million) overall through February 2024.

"The government will ensure supplies are maintained, protect our energy security and do everything we can to support the workers, including engaging with trade unions and industry bodies," he added.

In another presentation, Prax said that last year it recorded adjusted earnings before interest, tax, depreciation and amortisation of $120.4 million and that its adjusted net debt to equity ratio stood at 0.31 times in February 2024.

Earlier on Monday, management consultancy firm Teneo said it had been appointed administrator of State Oil Limited, Prax's parent group.

Teneo said Lindsey staff were being kept in place and being paid.

State Oil joint Administrator Clare Boardman of Teneo said that all options would be considered, including a sale of Prax's upstream business and retail operations in Britain and Europe, all of which remain outside of insolvency.

Prax's upstream business consists of the Lancaster oilfield in the British North Sea, a geologically complex project which has been in an early production phase for years. It produced around 6,300 bpd last year, according to a presentation on Prax's website.

Prax runs around 250 retail fuel sites in Britain, including TotalEnergies-branded stations, in addition to petrol stations in Germany, Austria, Switzerland and Denmark.

($1 = 0.7291 pounds)

(Reporting by Shadia Nasralla. Additional reporting by Muvija M, Ahmad Ghaddar and Susanna Twidale. Editing by David Goodman, Mark Potter and Cynthia Osterman)

((Shadia.Nasralla@thomsonreuters.com;))