Grangemouth oil refinery to close next year with loss of 400 jobs

Scotland’s last remaining oil refinery at Grangemouth is to close next year with the loss of 400 jobs, leaving the UK with only a handful of refineries and increasing the country’s reliance on imported fuel.
The site’s owner Petroineos, a joint venture between Sir Jim Ratcliffe’s Ineos and PetroChina, believes that domestic demand for motor fuels will fall sharply with the forthcoming ban on new petrol and diesel cars.
“Demand for key fuels we produce at Grangemouth has already started to decline and, with a ban on new petrol and diesel cars due to come into force within the next decade, we foresee that the market for those fuels will shrink,” Frank Demay, the chief executive at Petroineos Refining, said. “That reality, aligned with the cost of maintaining a refinery built half a century ago, means we are exploring ways to adapt our business”.
Petroineos warned in November that it was thinking of shutting down the site. The company hopes to avoid compulsory redundancies.
The decision angered Ed Miliband, the energy secretary, who said he was “deeply disappointed”, as did his Scottish government counterpart, Gillian Martin. Unions described the loss of jobs at the plant as an act of “industrial vandalism”.
Grangemouth accounts for about 14 per cent of the UK’s overall refining capacity, supplying motor fuels and other products across Scotland and the north of England. While the UK is a net exporter of petrol it already imports diesel and jet fuel to meet domestic needs.
Petroineos intends to establish an import and export fuel terminal at the site to ensure that supplies to forecourts and other customers are not affected. The company pointed out that the refinery has accumulated losses of $775 million since 2011 even though $1.2 billion has been invested in it. The ageing infrastructure at Grangemouth, originally opened in 1924,, means that it is less efficient than overseas competitors and requires a £40 million investment to keep it running beyond next spring.
Petroineos said the closure would take place between April and June next year with about 75 workers remaining to run the import and export terminal.
The UK and Scottish governments had commissioned a study looking at potential future uses for the refinery and there are believed to be options in areas such as hydrogen, biofuels and sustainable aviation fuel. However, none of those is likely to be in place by the time the refinery winds down.
The UK and Scottish governments reacted by producing a joint investment plan that aims to preserve industry at Grangemouth. That involves an extra £20 million on top of a previously announced £80 million for the Falkirk and Grangemouth Growth Deal, which aims to fund new growth projects in the area.
The UK government said it would look at how its National Wealth Fund could be used to back alternative uses for the refinery.
Up to 280 workers are expected to go in the three months following the closure while another 100 are to be retained for up to a year to begin decommissioning work. A handful will stay on longer to oversee more decommissioning and demolition.
Hisashi Kuboyama, from the Federation of Small Businesses in Scotland, said the ripples would be felt “beyond the refinery gates” and added: “The knock-on effect on the supply chain will have an impact on numerous small businesses across the length and breadth of the country, putting many more jobs than the 400 on site at risk.”
Sharon Graham, the Unite union’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 decision does not directly affect other petrochemical operations at the vast Grangemouth complex in central Scotland.