UKGov blocks answers on Russian oil imports undermining Scots refinery

The Centre for Research on Energy and Clean Air (CREA) says that a "refining loophole" means countries who have not issued sanctions on Russia, are able to legally import the nation's crude and refine it into oil products such as jet fuel and diesel for export.

It has estimated that some 3% of all petroleum products imported by the UK were produced from Russian crude oil in the 12 months since the ban was introduced in December, 2022, worth around €660m (£570m).

READ MORE: Doomed Grangemouth refinery set for stay of execution as unit restarts

It claimed that the so-called loophole also indirectly provided Russia with more than €165m (£142m) in tax revenues.

They say that the loophole in the sanctions enables those countries that are not imposing sanctions on Russia, like India, China and the United Arab Emirates to legally import Russian crude oil, refine it into oil products, and export those to the UK and EU. 

The loophole enabled higher sales of Russian crude oil, pushing up the selling price, and the funds sent to finance the Kremlin’s war chest, they say.

Ministers have been quizzed by former justice secretary now East Lothian MP and Alba Party deputy leader Kenny MacAskill, about the volume of oil that has identified as being from Russia in cases where investigations have been concluded.

He was told by the Nigel Huddleston, the financial secretary to the Treasury that HM Revenue and Customs was responsible for enforcing and investigating export controls on strategic goods and sanctions and investigating potential breaches of those controls.

And he said they do not discuss operational enforcement matters pertaining to specific import or export scenarios.

He then sought answers from the Chancellor of the Exchequer over what prosecutions have been undertaken, are ongoing and are pending by HMRC into the illegal importation of Russian oil branded as refined and from other countries.

But the response stated that the question was "subject to a block by Government".

The fair energy prices campaigner who has led a campaign to save the Grangemouth oil refinery and fears the Russian imports are undermining Scottish production described the response as "astonishing and undemocratic" .

The CREA research identified 12 refineries that were importing Russian crude and exporting oil products to the UK since the implementation of the ban on Russian crude oil.

They said the bulk of the UK’s imports of oil products from refineries processing Russian crude came mainly from three in India which together exported €1.6bn of oil products to the UK, of which it was estimated €619m was derived from Russian crude. 

Official data shows that the value of refined oil exported from India to the UK has risen dramatically since Russia's 2022 invasion. In 2018 the UK imported £682.19m  of refined oil from the country followed by £402.2m worth in 2021 which rose to £1.82bn in 2022 and stood at £1.5bn in 2023.

Refined oil is now the number one import to the UK from India by value accounting for 15.5% of all goods coming in from the country.

Separate research from campaign group Global Witness estimated that throughout 2023, some 5.2 million barrels of refined petroleum products that had been produced from Russian crude oil were imported to the UK.

Most of the fuel imported - 4.6 million barrels - was jet fuel, which the group's researchers suggested was used in one in 20 UK flights.

UK government records show that direct oil imports from Russia fell from £1.5bn in the first quarter of 2022 to zero the year after.

This led to a surge in fossil fuel imports from authoritarian petrostates. The UK spent £19.3bn on oil and gas imports from Algeria, Bahrain, Kuwait, Libya, Qatar, Saudi Arabia and the United Arab Emirates in the year to March 2023 – a 60% increase on the previous year.

Meanwhile Scotland's only oil refinery, which is set for closure next year putting thousands of jobs at risk, is expected to get a stay of execution - after a key reason for its demise was quietly brought back into action after a multi-million pound investment.

In November bosses at the Petroineos plant in Grangemouth told staff that Scotland "simply won't be big enough to support a fuels refinery" and set a timeline for its closure next year.

Refinery owner Petroineos - the joint venture between Ineos Group - the petrochemicals giant controlled by 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.

The Grangemouth plant was established almost a century ago and became symbolic of Scotland's 'black gold', used by the Scottish National Party during the 1970s in making their economic case for independence from the rest of the UK.

Mr MacAskill added: "As war wages there's hypocrisy on Russia as the oil flows in. It undermines need for Grangemouth and yet also exposes the dangers of its closure by leaving you dependent on imports from wherever.

"It's about energy security. In this troubled world why risk importing from abroad when can and should refine at home.

"There’s also the sham that sanctions working. Some folk making a fortune and little being done about it. 

"Even if HMRC require secrecy for ongoing investigations given the period of time that this has been ongoing surely some prosecutions or penalties would have been imposed. But none.

"The arguments for Grangemouth are the economic damage and environmental consequences of closure but also energy security. Closing it means importation of refined fuel never mind exporting raw product. How in this troubled world can that be sensible."

The vital Grangemouth hydrocracker unit, which produces jet fuel, diesel and Liquefied Petroleum Gas (LPG) went offline in April, last year and has not operated since. It is seen as a key reason why the the refinery was heading towards imminent closure.

But it has emerged that the profitable unit has been started up again with insiders saying it was expected to have cost around £30m to fix.

The development has led to calls to lift the immediate threat of closure.

Insiders have told the Herald that the business is taking a "watch-and-see" approach and that mid-2025 is now seen as the earliest that the plant will halt production as an oil refinery. It is expected this will mean that an end point will be nearer to 2027 when new investment is needed on the hydrocracker.

A survey conducted by the Unite union involving hundreds of refinery workers, including contractors "strongly indicates" that the workforce believe there has been a "collective failure" to support them following the announcement by Petroineos to transition.

Once Grangemouth goes, Scotland would be the only one of the top 25 major oil producing nations that would not have a refinery. There would be five others remaining in the UK, after the Grangemouth closure.

Mr MacAskill has further raised concerns with UK Home Secretary James Cleverly saying: "Neither prosecutions nor penalties have been applied to those importing Russian oil that is refined in, and branded as coming from, India and other countries.

"At the same time, the threat of closure hangs over Grangemouth refinery. The world knows that this activity is ongoing, and Grangemouth is aware of the threat facing it and industrialisation in Scotland.

"Is it not time the Minister spoke to colleagues to ensure that not just state security, but energy security is considered, that our refinery capacity remains in Scotland and that, at the same time, those profiting from bringing in Russian oil are prosecuted?"

Mr Cleverly responded: "This Government is committed to ensuring security. While they have not been universally applauded, the licences that we have awarded to ensure that there is a vibrant hydrocarbons industry in Scotland are important for jobs, for the Scottish economy, for the UK economy and for our energy security.

"I can reassure... that energy security will remain at the forefront of our minds. On sanctions evasion - yparticularly oil and gas sanctions—I assure him that my noble friend Lord Cameron, as I did when I was Foreign Secretary, raises these issues internationally with those countries still trading with Russia, at every opportunity."

The UK Government said that since the ban there has been non direct import of Russian oil and oil products into the UK.

A UK department for energy security and net zero spokesperson said: "After Putin’s illegal invasion of Ukraine and weaponisation of energy, we took immediate steps to end all imports of Russian fossil fuels, including a ban of oil and oil products that came into force in December 2022.

“In addition to providing proof that goods are not of Russian origin, importers must now include the country of last despatch to ensure oil from Russia is not being diverted through other countries.

The UK Government said that imports of refined oil products from Turkey were 0.1% of the total.

It said all importers of oil and oil products into the UK must be able to provide proof of origin to demonstrate that goods are not of Russian origin to enforcement authorities.

It said that key downstream oil data collection requests country of origin as well as country of last despatch to "ensure oil from Russia is not being diverted through other countries".

In November, last year Greenpeace activists whose protest at an oil terminal forced a tanker carrying Russian diesel to U-turn in the River Thames were cleared of aggravated trespass, with a judge stating Russia’s war in Ukraine “could be described as terrorism”.

The defendants, aged between 27 and 72, claimed they were “preventing a crime” by occupying a jetty at Navigator Terminals in Grays, Essex, on May 15 preventing the vessel from unloading the diesel.

The 10 defendants had denied, and were each cleared of, a single charge of obstructing or disrupting a person engaged in a lawful activity under the Criminal Justice and Public Order Act 1994.

The Grangemouth refinery produces a range of fuels including petrol, diesel, kerosene, LPG and jet fuel and currently employs around 500 directly and it is understood there are hundreds of contractor workers that support staff. Ineos employs another 450 staff on the site at Forties Pipeline Services and a further 1,000 in its petrochemicals business.

The 1,700-acre site is estimated to supply 70% of the fuel to Scotland's filling stations as well Northern Ireland and the north of England.

It is the primary supplier of aviation fuel for Scotland’s main airports, and a major supplier of petrol and diesel ground fuels across the central belt.

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.