An oil refinery that supplies 10pc of British fuel is at risk of shutdown within days, raising the prospect of disruption to national supplies.

The Lindsey Oil Refinery in Lincolnshire, previously part of the Prax Group, has been plunged into chaos following the collapse of its owner.

It has been in the hands of the Insolvency Service since Monday, when administrators were called in.

Ed Miliband, the Energy Secretary, has been racing to secure the future of the site, which supplies Heathrow Airport.

However, The Telegraph understands that deliveries of crude have stopped and refined fuels are not leaving the site either.

If the situation continues, the plant will be forced to shut down by the end of this week.

The hold-up is because of a lack of agreement between the Insolvency Service and commodities giant Glencore, which owns the oil and therefore any refined products until it is paid, sources told The Telegraph.

Standstill leads to stockpiling

So far the refinery has been able to continue operations by drawing down oil stockpiled on site and then putting the refined products into storage tanks.

But there is concern that the site’s available tanks will be full by the end of the week without a breakthrough in the talks with Glencore – a situation that would force the plant to shut down.

Lindsey produces around one tenth of Britain’s fuel supplies, including jet fuel destined for Heathrow Airport and petrol and diesel sent to hundreds of petrol stations.

On Wednesday, a source close to Glencore said the company was working urgently with the Insolvency Service to resolve the impasse.

A spokesman for FTI Consulting, which is managing the plant on behalf of the Insolvency Service, declined to comment.

The Government insisted the UK was “well supplied with fuel”.

But there is concern that the site’s available tanks will be full by the end of the week without a breakthrough in the talks with Glencore – a situation that would force the plant to shut down.

Lindsey produces around one tenth of Britain’s fuel supplies, including jet fuel destined for Heathrow Airport and petrol and diesel sent to hundreds of petrol stations.

On Wednesday, a source close to Glencore said the company was working urgently with the Insolvency Service to resolve the impasse.

A spokesman for FTI Consulting, which is managing the plant on behalf of the Insolvency Service, declined to comment.

The Government insisted the UK was “well supplied with fuel”.

They paid themselves a $5m (£3.65m) dividend from the Prax group last year despite the company posting almost $30m worth of losses.

The company had been in talks with the Government since April but had refused to share details about its financial situation that were repeatedly requested by ministers and officials.

Mr Soosaipillai had also assured officials there was no immediate threat to the refinery, a position that suddenly changed last week as his company rushed to declare insolvency.

On Monday, Mr Miliband demanded a full investigation into the circumstances of Prax’s collapse and called for the actions of its directors to be scrutinised.

Workers left in limbo

For now, the Insolvency Service is hunting for a potential buyer of the Lindsey refinery. If no sale can be agreed, ministers have suggested the site will have to be gradually wound down.

That would leave Britain with just four major refineries, following the closure of the Grangemouth refinery in Scotland by PetroIneos earlier this year.

Micheal Shanks, the energy minister, told the Commons earlier this week: “The wealthy owner cannot wash his hands of his obligations to the workers and their families. That is why we call on him to put his hands in his pockets and deliver proper compensation for the workers.”

On Wednesday, a source at the Lindsey plant told the Telegraph there were fears about workers quitting amid the uncertainty. Some 400 people work at the refinery and skilled oil and gas workers are in demand globally.

The source said: “There’s a lot of worry, and there’s a lot of anger as well, because there’s so many unknowns.”

They added: “The Government wants to find a buyer but that’s a worry as well, particularly as they’ve already let down Grangemouth.

“So we’re all wondering, are they now going to let another refinery fall by the wayside? They were only talking about energy security last week, but there doesn’t seem to be any urgency at the moment.”

There remains about a week’s worth of crude oil stored at the Lindsey refinery but the more pressing matter is the rate at which storage tanks are currently being filled with finished products.

Staff have been told that the site’s maximum available capacity is expected to be reached by the end of this week. At that point, the facility would have to temporarily shut down.

Usually, finished products leave by road, rail and the Finaline pipeline, which transports jet fuel to the Buncefield oil depot, near Hemel Hempstead, for onward transportation to Heathrow.

But the lack of a deal between the Insolvency Service and Glencore means that nothing can come in or out of the site, multiple sources said.

Glencore secured a deal to supply crude oil to the Prax site last summer, taking over from rival Trafigura. Under the arrangement, Glencore owns the oil – including refined products – until it has been paid for.

Ships with fresh supplies have been turned away since Saturday, including one tanker that was due to make a delivery on Tuesday. That ship, Calypso, has been idling in the North Sea but now looks to be headed for Rotterdam, according to Marine Traffic.

A spokesman for the Department for Energy Security and Net Zero said: “The UK is well supplied with fuel – Prax Lindsey Oil Refinery is right next door to one of the biggest and most efficient refineries in the country, and stock levels are normal across the UK.

“An Official Receiver has been appointed to take action to ensure fuel supply and safe operations at the site – including managing suppliers.” (The Telegraphy)