‘A national emergency’: Grangemouth refinery closure sparks fears for the future

Trade union leaders said the announcement must be a ‘wake-up call’

Its gas flares and cooling towers are a landmark of industrial Scotland. Oil has been refined at Grangemouth for a century, supplying much of the fuel that powers Scotland. But that long, proud story could soon come to an end.

Petroineos, which owns the plant, sparked an outcry this week after announcing Scotland’s only refinery could cease operations as soon as 2025. The site will instead become a fuel import terminal, with the loss of around 400 direct jobs – and potentially many more in the wider supply chain.

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But the impact stretches far beyond this. Grangemouth, which is one of only six refineries remaining in the UK, supplies 70 per cent of fuel to Scotland’s petrol stations and is the primary supplier of aviation fuel for its main airports. Petroineos – a joint venture between Beijing state energy firm PetroChina and Sir Jim Ratcliffe's Ineos – says it is of “strategic importance” to Scotland’s energy supply and regional economic development.

"The implications of what's going to happen here are enormous," said Robert Spears, a long-serving councillor in Grangemouth who worked at the refinery for three decades. "You're not dealing with a town, you're dealing with a country here."

The GMB Scotland trade union, which represents contractors at the industrial complex, said the impact of closure would be “potentially catastrophic” and called the situation a “national emergency”.

Louise Gilmour, GMB Scotland secretary, said: “There is clearly a huge amount of uncertainty inside Grangemouth and the surrounding communities but closing the refinery there would have repercussions across Britain. These are well-paid skilled jobs and are not only supporting local economies in the Central Belt of Scotland but up and down the country.

“Contractors travelling to the site are staying in guest houses and hotels and spending money in the shops, restaurants and bars. However, the knock-on impact is potentially catastrophic for countless firms and families with no obvious connection to Grangemouth.”

She said talk of a “just transition” away from fossil fuels and towards green energy has become a “platitude”, adding: “It is a catchphrase used by politicians to suggest progress is being made despite all evidence to the contrary. There is no transition, just or otherwise, because, so far, our highly-skilled and hugely experienced oil and gas workers have transitioned nowhere but abroad.

“The UK and Scottish governments have wish lists where industrial strategies should be and we have heard enough airy promises of green jobs tomorrow while we lose skilled jobs today.”

Gilmour continued: “This announcement must be a wake-up call. Grangemouth is a national emergency and needs an emergency response. We have been repeatedly told the drive to renewables will create economic opportunities and new jobs but have been forced to watch as those opportunities are seized by other countries and those jobs go abroad. We have waited too long for an industrial strategy that combines vision and investment in the UK to deliver net zero while, at the same time, protecting the oil and gas sector needed to underpin that transition.”

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Holyrood’s economy and fair work committee previously carried out an inquiry into a just transition for the Grangemouth area. Its convener, Claire Baker, said it received “many assurances that a just transition would be delivered”, but “there are clearly now questions to be answered”.

The committee has invited the Scottish and UK Governments and Petroineos to appear in front of it before Christmas. The latter previously annoyed MSPs due to a perception – hotly denied – that it was failing to fully engage with the inquiry.

The Scottish Conservatives have insisted the “hostile attitude” shown towards oil and gas by the SNP-Green Government – as well as Labour’s “betrayal” of the sector – will have been a factor behind the latest announcement.

Dr Ewan Gibbs, a historian of energy and industry at the University of Glasgow, dismissed this. “I don't think that's what's at play here,” he said. "Companies like Ineos and PetroChina who own Grangemouth are hard-nosed. They're responding to the bottom line, and I don't think it's the fact that [Green ministers] Lorna Slater and Patrick Harvie are in government that's concerning them here.”

He said the closure of Grangemouth refinery would sever a historic link with North Sea production, while exposing the “folly” of the UK Government’s argument that issuing more oil and gas licenses will help boost energy security.

"Grangemouth is connected to the Forties pipeline system,” Gibbs said. “Oil that's drilled in the North Sea is used to make petrol at Grangemouth. That's probably the only part of the vision for the North Sea providing energy security and self-sufficiency that was developed in the 70s that's actually still with us. That's going to be demolished, effectively – dismantled by this decision.

"I think it really exposes the folly of the claims that the UK Government made just a few months ago around licenses for new oil fields, claiming that somehow this is going to bolster our energy security."

This was echoed by Dr Connor Watt, an anthropologist at LSE who has studied the oil sector. “[Prime Minister] Rishi Sunak was already on a very shoogly peg, because as soon as you look at the imports and exports of crude, you realise that energy security is a myth, because we export almost all the crude that we extract and then we import crude which we then refine. There's already a big shuffling of cards going on in terms of the way in which crude refining and trading works, but the Forties pipeline into the refinery was probably the last real, tangential link between refining capacity in the UK and North Sea production."

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James Marriott, co-author of Crude Britannia, put it more bluntly. Sunak's arguments around energy security were already "bullshit", he said, and “they are even more so when you've lost Grangemouth". He added: "The closure of Grangemouth further illustrates how that is a complete lie."

He said a just transition is "absolutely necessary", adding: "It is perfectly reasonable and relatively simple to do it – it's complex in some ways, but if you have the right political will, we can effect a just transition. We've done it in a whole range of industries over time, and we can do it again. And not only can we, but we have to."

Gibbs said Scotland's declining industrial base is dominated by large multinationals and state-owned enterprises from other countries, such as PetroChina. "I think it's really important to highlight that it's Ineos and PetroChina that own Grangemouth,” he said.

"It's a plant that used to be effectively owned by the public indirectly, because when Anglo-Persian built the refinery in the early 1920s and they then became BP, that was a company where the government owned the largest share until the 1980s, when that was fully privatised. In many ways, this is about a change in who owns and directs key resources in Britain and Scotland's energy economy.”

He said the planned closure is "only the latest in a phased withdrawal of the significance of the industry in employment terms in the town", adding: "You have these sort of totemic moments of what seem like quite catastrophic final closures, but it's also important to place them in the longer run experience."

On Friday, Neil Gray, Scotland’s energy secretary, said he will explore every opportunity to extend operations at Grangemouth refinery beyond 2025. However, he added he is “not one to set unrealistic expectations”, and the global factors at play are “extremely challenging”.

Mr Gray has written to UK Energy Security Secretary Claire Coutinho and said he has asked for a meeting in “very short order”.

Petroineos previously said the site “faces significant challenges due to global market pressures and the energy transition”.

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Earlier this week, Franck Demay, chief executive at Petroineos Refining, said the company anticipates continuing refinery operations until spring 2025. “This is the start of a journey to transform our operation from one that manufactures fuel products into a business that imports finished fuel products for onward distribution to customers,” he said.

“Throughout this process, our focus will remain on the safe production and reliable supply of high-quality fuels to our customers in Scotland, the north of England and Northern Ireland. As we start to make this investment in preparing for a future transformation, we are equally committed to a regular programme of engagement with our colleagues about the changes we are making to our business.”