Grangemouth oil refinery to close next year

The Scottish Government must “intensify the pace” of the just transition, First Minister John Swinney has said, after it was confirmed Grangemouth refinery will close next year.

Scotland’s only oil refinery is in the process of changing into a fuels import terminal, but the closure of its refining operations will lead to the loss of 400 jobs.

Speaking at FMQs, Swinney said the closure was “profoundly serious” and said his government would “provide assistance” to support workers and the town.

He said there has been “expansive dialogue” between Scottish ministers, the UK Government, and Petroineos in recent months, and both governments had “made the case for refining to continue”.

Meanwhile local MSP Michelle Thomson has revealed a third-party buyer is interested in purchasing the site wholesale.

But announcing the move on Thursday morning, CEO of Petroineos Refining Frank Demay said the energy transition meant the market for fuels had already started to shrink and would continue to do so in the coming years.

The import hub is expected to become operational in the spring.

Demay said: “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.”

He added that the firm would seek to “minimise” compulsory redundancies, but the new import terminal would only require about a fifth of the current workforce.

The UK Government has described the decision as “deeply disappointing” and the Scottish Government said it would “support every worker”. 

Both governments have announced a joint plan intended to secure the future of the site, including a £100m funding package to support the community.

Also speaking at FMQs, Scottish Labour deputy leader Jackie Ballie – who was standing in for Anas Sarwar – said: “The clear message this morning is the UK Labour government is ready to support the site.”

She urged the Scottish Government to continue working with the UK Government “in the interest of the community and energy security”, and said Scottish ministers must “step up action” on just transition more broadly.

Swinney said there was “plenty of action” on taking up “green opportunities”, but added: “Jackie Baillie is right, we’ve got to intensify the pace which is why the green industrial strategy has been published.”

Scottish Tory leader Douglas Ross said it was “absolutely right” that the parliament was “united” on supporting Grangemouth.

But Scottish Green co-leader Patrick Harvie said the community had been “failed by the private owners and by both governments” because it had been clear a just transition plan was needed for some time.

Unions representing workers have reacted angrily to the announcement, saying the company and government “will not be forgiven”.

Derek Thomson, Unite Scotland’s regional secretary, said: “Petroineos and government will not be forgiven for their collective failure to prevent any time gap between the refinery’s closure, and there being shovel-ready low carbon projects at the complex for workers to directly transition towards.”

The news of the plant closure was announced last November, though an exact closing date had not been confirmed.

Following today’s announcement, UK energy secretary Ed Miliband said: “It is deeply disappointing that Petroineos have confirmed their previous decision to close Grangemouth oil refinery.  

“We will stand with the workforce in these difficult times, that is why 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. Workers and their families should be in no doubt this is a government that stands with workers, trade unions, and businesses to fight for jobs and investment in Scotland.” 

And Scottish energy secretary Gillian Martin said: “My immediate thoughts are with the workforce. This is a very challenging time for them and their families, and we will support every worker affected by this decision.  

“We are working very closely with the UK Government and together we have communicated our disappointment to Petroineos today.  

“The Scottish Government has consistently made clear our preference was for refining to continue as long as possible, and we have continued to press the shareholders for a positive decision until the 11th hour. 

“This significant package of support combines immediate help for affected workers and a long-term contribution to ensure that Grangemouth continues to thrive in the future. We are clear that there should be a just transition for the refinery site and we remain committed to bringing forward low carbon opportunities that will sustain skilled jobs across the wider area for many years to come.” 

MSP for Falkirk East Michelle Thomson has revealed she has been in talks with a potential buyer for the refinery.

She said: “I can today make the chamber aware that I’ve been working with a third party who hopes to purchase the refinery in its entirety. The matter, of course, is commercially sensitive and confidential, but will the first minister meet with me so that I can share what information I can with the permission of the potential buyer?”

The first minister said he was “very happy to explore all possibilities”.