Scotland’s last oil refinery, located in Grangemouth, is set to close in 2024. This decision will result in the loss of 400 jobs and an increased reliance on imported fuel for the UK.
The closure, announced by Petroineos, attributes the decision to declining domestic demand for motor fuels and the high costs associated with maintaining the ageing facility.
Reasons for Closure
The closure is driven by a decline in demand for motor fuels, which has been exacerbated by the impending ban on new petrol and diesel cars. With the market for these fuels expected to shrink further, maintaining an old refinery is no longer viable.
Petroineos, a joint venture between Sir Jim Ratcliffe’s Ineos and PetroChina, highlighted the significant costs of keeping the nearly century-old refinery operational. The infrastructure, dating back to 1924, requires an additional £40 million to remain functional beyond next spring.
Economic Impact
The Grangemouth refinery currently accounts for approximately 14% of the UK’s overall refining capacity. This closure will have a notable impact on fuel supply, particularly in Scotland and northern England. Although the UK is a net exporter of petrol, it imports diesel and jet fuel.
The refinery’s closure will lead to substantial job losses. Up to 280 positions will be eliminated within three months of the shutdown, and another 100 employees will stay on for up to a year for decommissioning efforts. Approximately 75 workers will remain to operate a new import and export fuel terminal at the site.
Political and Social Reactions
The announcement has sparked significant criticism from political leaders and unions.
UK Energy Secretary Ed Miliband and Scottish Energy Secretary Gillian Martin expressed deep disappointment over the decision. Union leaders have condemned the move as “industrial vandalism,” with Sharon Graham of the Unite union criticising both Petroineos and politicians for failing to secure alternative employment opportunities.
Government Response and Future Plans
In response to the refinery’s closure, the UK and Scottish governments have initiated studies to explore potential future uses for the site. Options include the production of hydrogen, biofuels, and sustainable aviation fuel. However, these alternatives are unlikely to be implemented before the refinery shuts down.
The governments have also announced a joint investment plan, adding £20 million to the previously announced £80 million Falkirk and Grangemouth Growth Deal. This initiative aims to fund new growth projects in the area and potentially support alternative uses for the refinery site.
Impact on Local Economy
The closure is expected to have a ripple effect on the wider local economy. Many small businesses that rely on the refinery will be impacted. Hisashi Kuboyama from the Federation of Small Businesses in Scotland warned that the supply chain will be affected, putting numerous additional jobs at risk.
The economic consequences extend beyond Grangemouth, affecting small businesses across the country. This represents a significant shift in the local socio-economic landscape, raising concerns about future employment opportunities.
Criticism of Management and Political Leaders
Sharon Graham from Unite union is particularly critical of Petroineos and political leaders for their failure to protect the workforce. She emphasised that the road to net zero should not come at the expense of workers’ jobs.
Graham stated, “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.”
Continued Operations at Grangemouth Complex
It is important to note that the closure does not impact other petrochemical operations at the Grangemouth complex. These will continue to operate as usual.
The closure of the Grangemouth oil refinery marks a significant shift in the UK’s energy landscape. It increases the nation’s reliance on imported fuels while also posing challenges for the local workforce and economy.
As the governments and stakeholders explore future uses for the site, the focus will likely shift towards sustainable energy solutions. However, immediate efforts are required to mitigate the economic impact on the affected workers and businesses.
