Scotland’s Energy Secretary remains hopeful that efforts can extend the life of Scotland’s only oil refinery after the companies behind the plan announced it will close in 2025.
Neil Gray told MSPs that he remained hopeful he could “extend the potential life” of the Petroineos refinery at Grangemouth after it was confirmed it was to halt by the spring of 2025.
But SNP ministers have been accused of having "sat on their hands" after failing to bring forward a just transition plan for Grangemouth two years after pledging to do so.
Petroineos, which owns the plant at Grangemouth, has announced that the site will stop operating in 2025 and will become a fuel import terminal.
The firm said the site “faces significant challenges due to global market pressures and the energy transition”.
It is understood the proposals could result in the loss of around 400 jobs.
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Mr Gray stressed he remained “committed to securing jobs at the site”, despite the decision.
It comes as Scotland’s Just Transition Commission, set up by the Scottish Government, warned it is “deeply concerned” there will be a repeat of “previous unmanaged industrial transitions in coal and steel” which have left a negative legacy in some communities.
The expert panel claimed that the decision to close the refinery runs “directly counter to a just transition to a low carbon economy”, as set out by the Scottish Government.
The cabinet secretary told MSPs that it was “a very worrying time for the workers” at Grangemouth.
Mr Gray, along with First Minister Humza Yousaf, met with senior management at Petroineos this morning, and told MSPs that “it is not a decision at this point to close the refinery”, but claimed the firm is starting the “necessary preparations to have the potential to transition Grangemouth to an import terminal”.
Mr Gray said that it is “a commercial decision taken due to global factors”, and insisted that it was “not a decision taken because of anything that his government or indeed the UK Government has done”.
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In Nicola Sturgeon’s programme for government for 2022/23, the Scottish Government committed to developing a just transition plan for Grangemouth in that financial year.
But no just transition plan for the site is yet to materialise and won't until next year.
Speaking in Holyrood, Mr Gray added: “Grangemouth remains an important asset in Scotland’s energy future and as such, we have committed to publishing a just transition plan for Grangemouth in the spring.
“Work on this is well underway and we’ve engaged with business, the local community and wider stakeholders and will continue to do so over the coming weeks and months.”
Mr Gray said that it was his “firm preference that the refinery should continue operating for as long as possible”.
He added: “This has been a refinery for over 100 years – this has been a potential on the horizon for some time.”
The minister has written to the UK Government’s Net Zero Secretary Claire Coutinho, to work together and “look at all potential options to extend the potential life of the refinery”.
Mr Gray said that part of the Grangemouth just transition plans include potentially transforming it into a biofuel terminal, giving it a role in the Acorn carbon capture, utilisation and storage project and being central to the ambition to develop green hydrogen.
Scottish Conservative shadow net zero, energy and transport secretary, Douglas Lumsden, said: “Part of the SNP’s delayed just transition plan was a promise to develop a plan for Grangemouth. But they sat on their hands and put off its publication – with no justification for the delay.
“Now that we’ve had the announcement that the refinery is due to close, it’s clear that the SNP-Green government’s dithering and constant undermining of the oil and gas industry has dealt a hammer blow to Grangemouth and the whole of Scotland’s economy.”
In a statement, Scotland’s just transition commission said: “The announcement earlier this week regarding the future of the refinery at Grangemouth runs directly counter to a just transition to a low carbon economy in Scotland.
“The just transition commission is deeply concerned that we will see a repeat of previous unmanaged industrial transitions in coal and steel whose harmful effects are still felt by communities across the country.
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“In this case there appears to have been minimal engagement with workers, the community or government ministers.
“We urgently need to understand what plans, if any, have been made to support a transition for workers impacted by these changes beyond redundancies, as well as what steps will be taken to ensure we are not effectively off-shoring emissions currently associated with the Grangemouth site.
“The announcement underlines clearly the need for government to play an active role in safeguarding workers and communities through the transition, since the market alone will not deliver a just transition.”
Around 500 permanent staff work at the refinery and the owners believe around 100 would be needed to operate an import terminal.
The commission is calling on Petroineos, the UK Government and the Scottish Government to engage fully and in good faith with workers and the community at Grangemouth and the surrounding area.
It also urges them to create a credible just transition plan that ensures employment levels and economic activity within the community are protected.
Before this week’s developments the commission had agreed to visit Grangemouth early in 2024.
It will then publish findings and recommendations on next steps to support a just transition for the site.
Petroineos did not wish to comment.
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