Ministers 'knew' of moves to shut Grangemouth refinery over a year ago

Executives have indicated that the the headcount at the terminal will be cut from 500 to 100 going forward but there are also concerns for the future of hundreds of supply workers who rely on the work at the refinery It is expected around 50 staff will still be required for decommissioning and eventual demolition of the site over a period of three years.

The Herald revealed in November that bosses at the Petroineos plant in Grangemouth established almost a century ago, told staff that Scotland "simply won't be big enough to support a fuels refinery" due to falling demand.

Staff were told that a start had been made on projects that will see the Grangemouth plant transition from a refinery to potentially an imported fuels depot over the next five years.

Refinery owner Petroineos - the joint venture between Ineos Group - the petrochemicals giant controlled by billionaire tycoon Sir Jim Ratcliffe - and China’s state-backed PetroChina - which bought the refinery in 2005, said it will remain a refinery until spring 2025 and that jobs would remain safe in the short term.

Analysis shows that Scotland faces becoming the only one of the top 25 major oil-producing nations that does not have a refinery to produce car fuel when the Grangemouth plant goes.

The transition plan came as Sir Jim Ratcliffe moved to take a 25% stake in Manchester United in an estimated £1.25bn deal.

Last week it emerged UK ministers offered no hope of intervening to save Scotland's only oil refinery, as North Sea revenues over two years were expected to soar to £17.2bn.

Details of the transition being knownn well in advance by ministers emerged in the wake of questions about the planning for the closure of the plant.

Iain Hardie, head of legal and external affairs at the refinery operator, Petroineos Manufacturing Scotland Ltd, confirmed the move had been a long time in the planning.

A formal notification was made to the UK Government, as is required under the Energy Act 2023, and the Scottish Government on the morning of staff being told in November.

He said: "That was in addition to their having been aware of the concept, the studies and planning for that potential outcome for well over a year."

Concerns have now emerged that MSPs on the Scottish Parliament economy and fair work committee who are looking into a 'just transition' to net zero for the Grangemouth area published a report last June without there being any suggestion that there plans to close the refinery and that the plant would be transitioned to a fuels import terminal.

It is sparked by the Scottish Government setting a target of 2045 for the nation to cut greenhouse gas emissions to net-zero.

Claire Baker, the Scottish Labour MSP for mid Scotland and Fife who is convener of the Scottish Parliament's economy and fair work committee has told the new wellbeing economy secretary in a letter that it "came as a surprise" to discover that the Scottish Government and UK Governments had been aware of the plans for over a year.

She said: " On that basis, it is extremely disappointing that there is still no just transition plan in place for the Grangemouth area."

It comes as locals in Grangemouth gathered for the launch on Saturday of a 'Save Grangemouth' campaign, led by former justice secretary now East Lothian MP and Alba Party deputy leader Kenny MacAskill.

He said of the development: "Both Westminster and Holyrood have been aware of the threat and yet have done nothing. Modest investment should have been made and steps taken to ensure North Sea oil revenues were funded for Grangemouth so we don't face the economic and environmental catastrophe now looming.

"That deceit needs atoned for it's not to late. A fraction of the revenue from North Sea oil allows the plant to be further increased. But both economically and environmentally it’s madness to have tanker oil out and refined fuel in.

"It’s time they stopped hiding, ceased denying complicity and actually took the necessary steps to ensure the refinery stay."

Refineries are crucial for turning unprocessed crude oil into products we can use like diesel and petrol for cars.

The Grangemouth plant has a refining capacity of 150,000 barrels per day while it plays a leading role in supplying Scotland’s fuel demand, and is of strategic importance to the nation's energy supply and regional economic development.

Its importance is further cemented as it is connected to the major Forties Pipeline System (FPS) - which carries about 40% of the UK's oil.

The original 32-inch pipeline was opened by the Queen in 1975 to transport oil from the Forties Oil Field, the UK’s first major offshore oil field. In 2017, the 235-mile pipeline system linked 85 oil and gas assets to the UK mainland and Grangemouth.

It was symbolic of Scotland's 'black gold' which would be used by the Scottish National Party during the 1970s in making their economic case for independence from the rest of the UK. It was argued that North Sea oil would not benefit the nation to any significant degree while the nation remained part of the United Kingdom.

The Scottish Government has indicated that a 'just transition' plan could be published in the spring of this year.

It has been estimated that £60-80m would be needed to re-start the hydrocracking unit at Grangemouth which some say will pave the way to profitability and a lifeline for the refinery and hundreds of jobs.

Experts say the cost of repairing the Grangemouth unit which went offline in April, last year, and has not been working since has played a key part in its anticipated closure.

The history of Grangemouth started in the mid 19th Century, when in 1850, Glasgow scientist Dr James 'Paraffin' Young took out a patent for 'treating bituminous coals to obtain paraffine therefrom'. The first oil works in the world were opened in Bathgate in 1851 producing oil from shale or coal.

By 1919 the six surviving companies, including Young's Paraffin Light and Mineral Oil Company Limited came together under the management of the newly formed Scottish Oils. In the same year Scottish Oils was acquired by the Anglo-Persian Oil Company, later to become BP.

BP was persuaded by Scottish Oils to locate a refinery near Grangemouth rather than in north-east England due to its flat ground to the east, its transport links and most importantly, the rich vein of labour skilled in shale oil refining.

By 1924 the refinery, now of one of six in the UK was in operation. It maintained a throughput of 360,000 tons per year until the outbreak of war in 1939.

A Department for Energy Security and Net Zero spokesman said: “We know this is a concerning time for workers and their families, and are working closely with Grangemouth refinery on the long-term future of the site and how they are supporting staff.

“The UK Government will always back the North Sea oil and gas sector and green industries, such as offshore wind and carbon capture and storage, to protect our energy security, attract investment and create opportunities for communities in Scotland and across the UK.”

A Scottish Government spokesman said: “The Scottish Government was made aware in November 2023 of Petroineos’ decision to commence preparatory work on new import infrastructure at Finnart and Grangemouth, on the same day as the workforce.

“The Scottish Government engages regularly with industry, including Petroineos, to discuss a wide range of potential future scenarios. We continue to work with Petroineos, trade unions, industry and the UK Government to secure a sustainable future for Grangemouth and its workforce that reflects our ambitions for decarbonisation and a just transition for Scotland’s industrial sector.”