The Chinese giant yesterday confirmed details of a joint venture with Ineos which will help protect the long-term profitability of the refinery and petro-chemical plant on the Forth.
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Around 1400 workers are employed at the site and Ineos chairman Jim Ratcliffe said another 7000 jobs at other firms, particularly in central Scotland, were dependent on the plant.
He claimed the deal would be “hugely beneficial”, adding there would be further mutual benefits through an agreement on sharing technology.
Finance Secretary John Swinney said the joint venture enhanced security of supply for customers as well as retaining the jobs and skills that had been built up over many years at Grangemouth.
The refinery has direct access to crude oil and gas from the North Sea and processes 210,000 barrels of crude oil a day -- the equivalent of nine million litres of clean fuel. It supplies petrol and diesel to Scotland, northern England and Northern Ireland.
The signing of the agreement yesterday was witnessed by Deputy Prime Minister Nick Clegg and the Chinese Vice-Premier, Li Ke Qiang. Both men said it represented a strengthening of links between the UK and China.
Following just 24 hours after the conclusion of a £6.4 million green energy deal between Scottish and Sino-Scottish firms, concluded when Mr Li visited Edinburgh on Sunday, Mr Swinney said it was further evidence of the strengthening ties between Scotland and China.
He said: “Scotland has unrivalled energy resources and expertise and the Scottish Government is committed to working with China across this sector.
“The Grangemouth refinery is a strategic asset for Scotland and this announcement represents good news for Scotland and Scottish jobs.
“It further embeds the successful relationship and excellent links that Ineos has with the local and Scottish communities.”
As The Herald reported last month, there have been long-running negotiations about the deal which will see investment both at Grangemouth and another Ineos refinery at Lavera in France. Although no details have emerged about the finances surrounding the deal, it’s believed the negotiations were complicated by the difficulty of agreeing a valuation for the refinery. Two years ago Ineos was given £7.6m by the Scottish Government as part of a £110m upgrading plan.
PetroChina, the largest oil and gas producer and distributor in China and one of the largest oil companies in the world, has a trillion dollar market capitalisation, employs 540,000 people and has a turnover of around £157 billion. Its acquisitions strategy has involved buying a number of refineries and oil-related businesses across the globe including Canada, Singapore, Argentina and Japan.
Calum MacLean, chief executive officer of Ineos Refining, said the new deal was the start of a long-term relationship which presented the opportunity for the company to progress its aim of forming strategic partnerships to help grow and strengthen its business.
He added: “The agreements will provide further investment in our refineries, securing their competitiveness in European markets, and will secure jobs and skills in the UK and France.”
Si Bingjun, general manager of PetroChina International London, said the agreement was consistent with the company’s strategy of building a broader business platform in Europe and of becoming a leading inter-national energy company.
Mr Ki and Mr Clegg also witnessed a number of other trade agreements, totalling £2.6bn, between British and Chinese companies.
BP and the China National Offshore Oil Corporation signed an agreement on deep-water exploration in the South China Sea, while Jaguar Land Rover committed to sell 40,000 Jaguar and Land Rover vehicles, valued at more than £1bn, in China this year.
The long road from Beijing to Edinburgh
First the Pope started his visit to the UK in Scotland. Then the Chinese vice-premier, tipped as the next leader of the global economic superpower, touched down in Edinburgh to be glad-handed by Alex Salmond before heading down to London.
It is small wonder the First Minister’s aides, ever ambitious to see Scotland appear a player on the international stage, are rubbing their hands at this week’s developments.
While the Salmond administration is becoming adept at rolling out the red carpet, the wooing of China as a big source of future inward investment and overseas sales was already well under way before the SNP came to power at Holyrood.
Previous First Minister Jack McConnell spent five days in China in 2004 to build educational links with Scotland, recognising that China had become an economic force to be courted.
The following year plans were announced to establish the Confucius Institute for Scotland within the former principal’s residence at Edinburgh University.
This was so successful that last year the Scottish institute was named Institute of the Year for the fourth year in a row out of more than 300 of these bodies around the world.
All of which points to a long lead in to the current wooing of China.
In 2006 the outgoing Labour administration summed up its aims with the words of Finance Minister Tom McCabe: “The speed and scale of China’s growth means that the stakes are rising: the benefits will be higher if we get our response right; the costs greater if we do not, particularly in terms of missed opportunities.”
The Salmond Government resolved to ensure this was one part of the previous administration’s legacy that it adopted, drawing up its own revised “China plan” which aimed to engage culturally, educationally and above all economically with the emergent superpower.
Scottish exports to China amounted to £250 million in 2007, making it the 17th ranked export destination. The following year the value had risen to £335m, ranking China at 14th on the list, while in 2009 with the recession beginning to bite the value stalled at £325m but the ranking rose again to 15th.
In 2000 the whisky export market to China was worth £1.5m, by 2009 this was £44m, and allowing for shipments via Hong Kong and Singapore may be worth double that. China also agreed to protect the branding of Scotch.