'Substantial investment' in Scottish refinery

GRANGEMOUTH is expected to receive a substantial investment after it was revealed that Petro-China's deal with Ineos for a 50 per cent stake in its refineries was worth $1 billion (£630m).

The creation of a joint venture between the two companies, revealed last month, is expected to kickstart an investment programme likely to run into hundreds of millions of pounds.

Ineos director Tom Crotty told The Scotsman the proposed deal was a "real vote of confidence in Grangemouth". "The whole purpose of Petro-China getting involved is that they see real growth potential in European refining and Grangemouth and Lavra in France as two of the best sites in Europe. They will want to invest with us in the future of these refineries."

While a specific investment plan for Grangemouth has yet to be finalised, Crotty pointed out that the scale of major investment programmes at refineries tended to be in the "hundreds rather than the tens of millions of pounds".

PetroChina, China's biggest oil and gas producer, yesterday lodged a formal offer for the stake in Ineos.

The two companies are now working to establish the joint venture which will see the transfer of 1,400 Grangemouth employees to the new entity.

Ineos, which has struggled with its debt, said the deal will reduce its leverage from 4.3 to 3.5 times earnings. The Grangemouth refinery processes around 210,000 barrels of crude oil per day.