OPERATORS of Grangemouth oil refinery have been given a £230 million government loan guarantee to help build an ethane storage tank, allowing the firm to import and process shale gas from the US.
Ineos said the financial package would allow it to raise the cash necessary to build the new import terminal and store at the petrochemical facility.
Company bosses hailed the deal as one of the most important infrastructure projects of recent times in Scotland and said it could protect thousands of jobs.
Ineos owns two of Europe’s four “gas crackers” – the other is in Norway – capable of handling US shale gas. Grangemouth will be the largest in Europe.
Ineos has yet to confirm how long it will take to build the terminal but said the entire site will be geared towards shale gas by 2016.
The deal comes less than a year after the site, which employs 1,370 permanent workers and 2,000 contractors, was on the verge of closure in a bitter dispute between Ineos and unions over pay and conditions. A decision by Ineos to close the plant last year was reversed.
The firm said at the time it would invest £300m as part of a long-term plan for Grangemouth to manufacture petrochemicals beyond 2017.
Chairman Jim Ratcliffe said: “This is one of the most important projects of recent times in Scotland, with implications to be felt right across the UK, not only for employment but also for manufacturing in general.
“Our ability to import US shale gas underpins the future of manufacturing at Grangemouth and across many businesses in Scotland. It is a vital step towards preserving the long-term future of the Grangemouth site.”
Danny Alexander, Chief Secretary to the Treasury, said: “Over £1 billion of infrastructure projects have now been brought forward as a result of the UK guarantees scheme. The Grangemouth guarantee is fantastic news for Scotland’s economic future, and for the UK’s energy security.”
By 2016, Grangemouth will be a shale gas-based facility, which Ineos said was essential if it is to compete in world markets. The financing package was also welcomed by the Unite union, which represents Grangemouth workers, who agreed a pay freeze, three-year no-strike pledge and pensions overhaul as part of the site’s survival plan.
A Unite spokesman said: “The confirmation of loan guarantees is obviously a welcome move and is part of the package which also saw the workforce make great sacrifices to secure the future of Grangemouth.
“Over the coming months it is vital that Ineos engages with its workforce and Unite in a positive manner to ensure there is the skilled manpower to deliver Grangemouth’s future.”
The deal for the expansion of Grangemouth also includes Scottish Government money.
Scottish finance secretary John Swinney said: “We are supporting these investment plans with £9m Regional Selective Assistance funding to secure the future of the Grangemouth facility and safeguard jobs in Scotland.”