Grangemouth oil refinery set to close by next year

Posted by author September 12, 2024 Jobs

Scotland’s only oil refinery is to close by next summer with the loss of 400 jobs, it has been confirmed.

Owners Petroineos previously said the Grangemouth plant had been facing “significant challenges” due to global market pressures and has been unable to compete against more modern and efficient sites in the Middle East, Asia and Africa.

The firm intends to transform the site into a fuels import terminal, with the number of staff expected to fall from 475 to 75.

Grangemouth is the oldest of the UK’s six refineries and currently supplies 65% of Scotland’s oil products, including petrol and diesel.

Petroineos initially announced its plan last year, but union leaders hoped it could remain open longer to provide time for a green alternative to be established.

However, the site is said to be averaging daily losses of around $500,000 – with the company having lost more than $775m since 2011 despite having invested more than $1.2bn to maintain the refinery’s safe operation.

In an update on Thursday, the firm said: “Petroineos has today announced its intention to cease refinery operations at Grangemouth and transition to a finished fuels import terminal and distribution hub during the second quarter of 2025, subject to consultation with employees.

“The INEOS businesses at Grangemouth, namely INEOS O&P UK and INEOS FPS (Forties Pipeline System), will continue as normal delivering high quality services and products to our customers and are largely unaffected by this change.

“We wish to assure our customers, suppliers and other stakeholders that it is ‘business as usual’ for the INEOS businesses at Grangemouth.

“INEOS Grangemouth remains committed to a long-term successful future for the site which includes the commitment to deliver net zero by 2045.”

Following the announcement, the Scottish and UK governments revealed a joint investment plan as part of efforts to secure an industrial future for the site.

The £100m package includes an additional £20m in joint funding from the two governments on top of £80m for the Falkirk and Grangemouth Growth Deal.

Immediate tailored career support will be offered to the workers, while the £1.5m Project Willow feasibility study has identified a shortlist of three credible options for the site – including low carbon hydrogen, clean eFuels and sustainable aviation fuels.

Gilliam Martin, Scotland’s net zero and energy secretary, said: “My immediate thoughts are with the workforce. This is a very challenging time for them and their families, and we will support every worker affected by this decision.

“We are working very closely with the UK government and together we have communicated our disappointment to Petroineos today.

“The Scottish government has consistently made clear our preference was for refining to continue as long as possible, and we have continued to press the shareholders for a positive decision until the eleventh hour.

“This significant package of support combines immediate help for affected workers and a long-term contribution to ensure that Grangemouth continues to thrive in the future.

“We are clear that there should be a just transition for the refinery site and we remain committed to bringing forward low carbon opportunities that will sustain skilled jobs across the wider area for many years to come.”

Ed Miliband, the UK’s energy secretary, said Petroineos’ announcement was “deeply disappointing”.

He added: “Unlike in the past, the government is working in lockstep with the Scottish government across every front.

“Workers and their families should be in no doubt this is a government that stands with workers, trade unions, and businesses to fight for jobs and investment in Scotland.”

Unite said there was “widespread fury” within the workplace due to the failure to ensure Grangemouth’s future.

The union is currently in talks with the government about alternatives for the site, including the production of sustainable aviation fuel.

Sharon Graham, Unite’s general secretary, said: “This is an act of industrial vandalism, pure and simple.

“This dedicated workforce has been let down by Petroineos and by the politicians in Westminster and Holyrood who have failed to guarantee production until alternative jobs are in place.

“This is now the last chance for this Labour government to show whether it’s really on the side of workers and communities. The road to net zero cannot be paid for with workers’ jobs.

“The government must put its money where its mouth is to ensure the jobs are safeguarded. This is the only refinery left in Scotland and it must remain.”