He said: "This announcement by Ineos is hugely disappointing. It is, however, the position we always feared as it became apparent that the stalemate was not going to be broken.
"It has been a growing danger since the plant was shut down last week and the emergence of a virtual deadlock between workers and management over the weekend.
"This is the outcome that matches our worst fears, which is why we urged getting the plant fired up instead of lying cold.
"I will be speaking again to management and unions today to try and seek any further resolution we can. I will also convene an emergency cabinet meeting with relevant ministers later today to discuss the ongoing situation.
"In preparing for this extremely difficult position we have been pursuing the contingency of potential buyers - we will now be actively exploring this as the main option as a matter of urgency.
"The Scottish Government strongly believes the site has a positive future and we will continue to work with the UK Government and all other parties concerned to find a solution that supports the workers affected and the wider Scottish economy."
Prime Minister David Cameron's official spokesman said: "This is a disappointing outcome. We would continue to urge both parties who have been involved in the dispute to try to find a way to continue their dialogue.
"The right thing to do is for the Government to offer its help and support in that process. Even at this stage we hope that a way forward could be found."
Asked whether there was a possibility of the plant being nationalised, the spokesman replied: "No."
Asked what contingency arrangements had been made in case petrol supplies were halted, the spokesman said: "Fuel supplies are continuing to be delivered, so that's the actual situation.
"Of course, Government has contingency plans for a range of scenarios, as you would expect."
Scottish Labour leader Johann Lamont said: "The Ineos announcement isn't just a hammer blow to the people of Grangemouth and the surrounding communities, it is a hammer blow to the Scottish economy and the rest of the UK.
"I am glad that the Scottish and UK Governments are working together and pledge my support in getting the refinery open again, and finding a way to keep the petrochemicals plant open.
"Ineos should get round the table and negotiate rather than issue ultimatum after ultimatum.
"Workers around Scotland and the UK have shown a great degree of flexibility during the global downturn since the banking crash.
"But it cannot be right in 21st century Scotland that an employer demands that a worker accepts cuts to their wages, their pensions and their conditions, and are told to either agree to them within 96 hours or face the sack.
"That is a Dickensian way for an employer to behave and cannot be tolerated.
"There is a committed workforce at Grangemouth. If the Ineos management is equally committed to their business they will negotiate with their workers, not threaten them."
UK LibDem Energy Secretary Edward Davey said: "I am saddened to hear of Ineos's plans to place the petrochemicals business into administration, particularly because of the impact it will have on the workforce and local community.
"While respecting Ineos's right to make this decision, it is regrettable that both parties have not managed to negotiate a fair and equitable settlement that delivers a viable business model for the plant.
"Even at this late stage, I urge Ineos to continue dialogue with the workforce, and Government will offer help and support with this.
"Ineos have informed us that the refinery will stay open and the management wish to restart full operations as soon as possible.
"We stand ready to help with discussions between the management and the union to ensure this can happen.
"Fuel supplies continue to be delivered as usual and there is no current risk of disruption to supplies.
"I continue to work very closely with the Scottish Government, and other colleagues across Government to share information with them."
Grahame Smith, Scottish Trades Union Congress (STUC) general secretary said: "The behaviour of Ineos is simply disgusting and it reveals the true nature of a feral private equity concern that clearly believes it has no social obligations whatsoever.
"In anticipation of this eventuality, the STUC has been in discussion with Scottish Ministers and the Secretary of State for Scotland over the past few days.
"If Ineos is not willing to invest in this plant alternatives must be quickly and diligently pursued.
"As many have noted over the recent period, the Grangemouth complex is too important to the Scottish economy to be closed on the vindictive whim of an unaccountable billionaire.
"When the stability of the economy was threatened by the failure of RBS and HBOS, government was quick to act.
"Now when the stability of the Scottish economy is threatened by the industrial blackmail tactics of Ineos, government must again find the will to act.
"The STUC will meet Unite colleagues later today to express the solidarity of the wider Scottish trade union movement and discuss ways in which we can provide practical support to the workforce and community."
TUC general secretary Frances O'Grady said: "This is a savage blow to the Grangemouth workforce and the wider Scottish economy. This is irresponsible capitalism at its worst.
"The Government always has contingency plans when workers go on strike, now ministers need to show they are as well prepared when owners go on permanent strike."
Losing the Grangemouth refinery would have serious implications for the UK and leave a huge hole in the Scottish economy, former Chancellor Alistair Darling has warned.
The Labour MP urged the Government and Scottish government to do everything it can to persuade negotiations to continue, adding it would never be restored should the facility be lost.
He also said it would be a "tragedy" if the site falls victim to rhetoric that appears to be from the 1970s rather than the standards expected of industrial relations today.
Mr Darling, MP for Edinburgh South West, asked Energy Secretary Ed Davey to explain what alternatives were being sought should Ineos walk away.
He told Mr Davey in the Commons: "If we lose it this will be a huge hole in the Scottish economy and a loss of refining capacity would have a serious implication for the whole of the United Kingdom.
"Do you agree there are two things that are necessary? Firstly the Government and the Scottish government should do everything they can to try and persuade these employers to start negotiating again.
"I think it would be a tragedy if we were to lose this if it falls to victim to rhetoric that looks more like the 1970s than it does industrial relations you would expect today.
"And secondly, if that is not successful, if Ineos are determined to walk away, can you tell us what steps the Government and Scottish government will take together to try and find an alternative.
"Because frankly losing a facility like this would be a major loss and once lost we'll never get it back again."
Mr Davey replied: "You are absolutely right. It is critical that we do absolutely everything possible to keep this petrochemicals plant and the refinery working.
"I am absolutely clear, working with the Scottish government, we will be doing everything we can to get negotiations going again. I understand from Ineos this morning they will be talking to Unite today, not just to tell them about their shareholders' decision but to discuss the issue in more detail.
"Let us see what comes from those talks.
"Should they not be successful and should Ineos decide to walk away, of course we will be very much involved in trying to find a future.
"The Scottish government, for the petrochemicals plant in particular, has a key role and we will work with the Scottish government on that. A lot will depend on the process Ineos management at the petrochemicals plant decides to take.
"They say they are going to talk to liquidators but they have other options so we will be in close contact with them as they develop those options. There may be alternatives with Ineos involvement. Whatever happens we will be very active in trying to seek an acceptable solution for the people involved and the Scottish economy."