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£230m ethane plant will give Grangemouth brighter future

The long-term future of Scotland's biggest petro-chemical plant and refinery has been safeguarded after UK ministers stepped in to guarantee a £230 million loan so that a massive ethane plant for the emerging shale gas industry can be builts.

SECURITY: Unions at the petrochemical plant welcomed the investment but stressed there was still resentment among the workforce following last year's dispute. Picture: David Cheskin/PA
SECURITY: Unions at the petrochemical plant welcomed the investment but stressed there was still resentment among the workforce following last year's dispute. Picture: David Cheskin/PA

Grangemouth was at the centre of a bitter dispute when owners Ineos announced last October the Stirlingshire site was to shut with the loss of around 800 workers.

But in a remarkable turnaround, the company has signed a contract with German-based TGE Gas Engineering on a terminal to store fracked ethane from the United States.

The UK Government's loan guarantee will allow the owner to push ahead with the issue of bonds to the public to fund the planned terminal.

Ineos's controversial chairman, Jim Ratcliffe, last year became a focus of workers' anger when he threatened to close the Grangemouth plant unless they accepted cuts to their terms and conditions.

Yesterday he announced: "Without doubt, 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 and those businesses that depend upon its continued presence in Scotland."

Scottish Conservative energy spokesman Murdo Fraser welcomed the Government funding, adding that it was another example of the benefits of Scotland remaining part of the UK.

He added: "They have helped to bring about a deal which will benefit the wider Scottish economy, while safeguarding hundreds of highly skilled jobs. Scotland cannot afford to miss out on our shale gas potential and the Scottish Government should be taking similarly pro-active steps to take advantage of this new energy source."

Ineos said it had invested £300m as part of a long-term survival plan to manufacture petrochemicals at the site beyond 2017.

However, the trade union Union, whose members were involved in the dispute, and some politicians said the wounds were still raw following last year's ultimatum.

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.

"Grangemouth's future doesn't just rest on securing investment, but also on the goodwill and hard work of a skilled workforce."

The Scottish Government said it is planning to push ahead with significant new investment planned for the plant.

Finance Secretary John ­Swinney said: "We are supporting these investment plans with £9m Regional Selective Assistance funding.

"We remain committed to working with all partners involved to ensure a thriving, sustainable plant at Grangemouth, and the new import terminal and ethane storage facilities are a key step in securing the long-term future of the site."

Michael Connarty, Labour MP for Linlithgow and East Falkirk, said he was "very pleased that the Government has continued with its plan and kept it promise to honour the investment of Grangemouth".

However, he also said there was still a "sour note" and "great feeling of resentment" in the community from the disputes.

Chief Secretary to the Treasury Danny Alexander said: "Over £1 billion of infrastructure projects have now been brought forward as a result of the UK guarantees scheme and £36bn worth of projects are pre qualified.

A recent study by the The ­British Geological Survey estimates there are only 80 trillion cubic feet of shale gas under central Scotland and six billion barrels of shale oil. It describes this as a modest amount.

By 2016, Grangemouth will be a shale gas-based facility, which Ineos said was essential if it is to compete in world markets beyond 2017.

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