Stay informed with free updates
Simply sign up to the UK energy myFT Digest — delivered directly to your inbox.
Scotland’s only remaining oil refinery at Grangemouth will cease operations in 2025, its owner said on Wednesday, putting about 400 jobs at risk as the company grapples with lower demand and tightening margins.
Petroineos, a joint venture between Sir Jim Ratcliffe’s Ineos Group and China’s state-backed PetroChina, said the site would instead convert to handling fuel imports.
The company said in a statement: “The timescale for any operational change has not yet been determined but the work will take around 18 months to complete and the refinery is therefore expected to continue operating until spring 2025.”
Grangemouth, which sits on the Forth estuary, 20 miles west of Edinburgh, provides most of Scotland’s fuel and employs about 500 people. The import terminal is expected to employ about 100 workers, according to a source close to the company.
The future of Grangemouth, which opened in the 1920s and is one of just six refineries remaining in the UK, has long been in doubt due to its age. Older refineries in Europe face intense competition from more efficient and newer counterparts in North America and Asia, at a time when the industry is struggling with thin profit margins.
The proposed closure highlights the risk to Scotland’s oil and gas sector as the UK seeks eventually to phase out fossil fuels as part of its commitment to achieve net zero emissions by 2050.
Franck Demay, chief executive at Petroineos Refining, said he expected refinery operations to continue until early 2025. He added that the company was considering some “low-carbon opportunities” for the site, including a possible bio-refinery 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. The business would be transformed from a manufacturer of fuel products into one that “imports finished fuel products for onward distribution to customers”, he added.
Neil Gray, Scotland’s energy secretary, said the decision by Petroineos was a commercial one for the company and the government in Edinburgh was committed to ensuring that there was a long-term future for Grangemouth.
“This is a commercial decision and it is our understanding that these works will future-proof the site to allow it to continue as an important fuel supply source for years to come,” he said.
Labour’s shadow Scottish secretary Ian Murray said the closure of the refinery would be “a hammer blow to both the local community and Scotland’s economy”. The campaign group Friends of the Earth said the Scottish government had failed “to put concrete transition plans in place with workers”.
Sharon Graham, general secretary of Unite, said: “This proposal clearly raises concerns for the livelihoods of our members but also poses major questions over energy supply and security going forward.”
She added that the union would “leave no stone unturned in the fight for jobs and will hold politicians to account for their actions”.
