The owners of the Grangemouth oil refinery have confirmed it will shut by the end of June next year, in a blow to Scotland’s industrial base and the site’s 500 employees.
Britain’s oldest refinery will close in the second quarter of 2025 to become a fuels import terminal and distribution hub, according to Petroineos, a joint venture between the Chinese state-owned oil firm PetroChina and Ineos, the petrochemicals empire of the British billionaire Sir Jim Ratcliffe.
The company first raised concern among unions and politicians in November last year after claiming it had no choice but to adapt to global pressures affecting the refining market by ceasing its refinery operations.
The decision to end refining at Grangemouth, which is expected to result in hundreds of job losses, was condemned by the Unite union as “an act of industrial vandalism”.
The UK and Scottish governments have promised to add £20m in joint funding to the £80m made available through the Falkirk and Grangemouth growth deal, which aims to support the community and its workers by investing in local energy projects to create new opportunities for growth in the region.
Ed Miliband, the UK energy secretary, said: “We are announcing a package of investment to help the workforce find good, alternative jobs, invest in the community and serve a viable industrial future for the Grangemouth site, with potential for future support from the national wealth fund … Unlike in the past, the government is working in lockstep with the Scottish government across every front.”
It is estimated that the growth deal will deliver more than £628m in economic benefits to the Falkirk area over the next 30 years and create 1,660 jobs.
The Scottish first minister, John Swinney, told Holyrood on Thursday there had been “good and sustained engagement” between the two governments on the future of Grangemouth, and that both had made the case for refining to be continued for as long as possible, “and certainly not for the announcement to be made today”.
“The Scottish government and the UK government have both jointly funded a study which has identified a short list of credible options to begin the building of a new long-term industry at the refinery site, including low carbon, hydrogen, clean fuels and sustainable aviation fuels,” Swinney said.
Petroineos said it planned to transform Grangemouth, which already imports liquefied natural gas (LNG) from the US, into a pure fuel import and export terminal. The company said the move was necessary in order “to safeguard Scotland’s supply of fuels for the future”, and claimed only a fifth of the site’s current workforce would be needed.
There had been hopes that jobs could be saved, after Keir Starmer described Grangemouth as a “real priority” in July during his first visit to Scotland after becoming prime minister.
However, Franck Demay, the chief executive of Petroineos Refining, said on Thursday: “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 further. That reality, aligned with the cost of maintaining a refinery built half a century ago, means we are exploring ways to adapt our business.”
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Unions representing tens of thousands of oil and gas workers – in particular GMB and Unite – are seeking answers about whether there will be a “just transition” that will secure jobs for their members as the UK switches to cleaner energy sources.
The challenges of “retrofitting a just transition” at Grangemouth were highlighted in July by the Just Transition Commission, an expert body set up by the Scottish government. It said securing the future of the oil refinery would be a litmus test of how the Scottish and UK government reset their relationship after Labour’s election win, and their first challenge in achieving climate goals fairly.
It warned that a lack of effective planning to date meant “the current path will deliver a disorderly and unjust transition”.
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.”
