Grangemouth oil refinery is to cease operations as soon as 2025 under plans announced by its owner, Petroineos, a joint venture between the Chinese state-owned oil firm and the petrochemicals empire owned by Monaco-based British billionaire Sir James Ratcliffe.
Amid warnings that the plan “blows a hole” in Scotland’s industrial base, trade unions and politicians raised concerns about the job security of the more than 500 people directly employed at the site near Falkirk and the impact of closing one of the UK’s six remaining large oil refineries on fuel supplies.
Petroineos, which has discussed its plans with the UK and Scottish governments, said it had had no choice but to adapt to global pressures affecting the refining market.
The company said it hoped to transform Grangemouth, which already imports liquefied natural gas (LNG) from the US, into a pure fuel import and export terminal within 18 months. It will also explore “low-carbon” options including refining biofuels at the 99-year-old refinery.
Labour’s energy and net zero secretary, Ed Miliband, said the plan was “deeply worrying” for Grangemouth staff and their families.
“The UK and Scotland desperately need governments with industrial policies that protect our workers,” he said. “Labour is calling on both governments to get round the table urgently with business, workers, and unions to understand how jobs can be safeguarded for the future.”
Franck Demay, the chief executive of Petroineos Refining, said it was “business as usual” at the facility.
“As the energy transition gathers pace, this is a necessary step in adapting our business to reflect the decline in demand for the type of fuels we produce,” he said. “As a prudent operator, we must plan accordingly, but the precise timeline for implementing any change has yet to be determined.
“This is the start of a journey to transform our operation from one that manufactures fuel products into a business that imports finished fuel products for onward distribution to customers.”
Sharon Graham, the general secretary of the Unite union, said: “This proposal clearly raises concerns for the livelihoods of our members but also poses major questions over energy supply and security going forward.”
Grangemouth, the only big facility of its kind in Scotland, is owned by Petroineos, a joint venture between PetroChina and Ratcliffe’s Ineos. It accounts for just under a sixth of Britain’s domestically produced refined fuel products, although the mix of products varies between refineries.
“Unite will leave no stone unturned in the fight for jobs and will hold politicians to account for their actions,” said Graham.
Petroineos’s website says Grangemouth, which has a refining capacity of 150,000 barrels a day, plays a “leading role in supplying Scotland’s fuel demand, and is of strategic importance to Scotland’s energy supply and regional economic development”.
Several members of the Scottish parliament called for an urgent ministerial statement from Westminster about the refinery, which supplies the majority of aviation fuel to Scotland’s airports, as well as a significant proportion of petrol and diesel in the nation’s central belt.
Stephen Kerr, MSP for Central Scotland, said the Grangemouth site accounted for 4% of Scottish gross domestic product and that thousands of jobs relied on the plant. He called for an urgent ministerial statement to address the “very bad news”.
Murdo Fraser, a fellow Scottish Conservative MSP for Mid Scotland and Fife and the party’s spokesperson on business, said shutting down the refinery was a “huge blow” to Scotland’s economy and “blows a hole in our industrial base”.
Meanwhile, Ratcliffe is preparing to invest about £1.25bn in a 25% of Manchester United.
The Department for Energy Security and Net Zero said: “We understand that these reports will be concerning for the refinery’s workers, and are seeking assurances from Grangemouth on how they are supporting employees and the long-term future of the site.
“We remain confident in our fuel supply and the government will continue to back the North Sea oil and gas sector and green industries, such as offshore wind and carbon capture and storage, to protect our energy security, attract investment and create opportunities for communities in Scotland and across the UK.”
Meanwhile, on Wednesday, the price of Brent crude fell when the Opec+ group of oil producing nations delayed a ministerial meeting after producers struggled to agree on production levels. They had been expected to discuss output cuts at the meeting on 26 November, but that has been delayed to 30 November. Brent crude fell 3.6% to $79 a barrel.
