The impending closure of Scotland’s last oil refinery at Grangemouth in 2024 signals a pivotal change in the UK’s energy landscape.
- Grangemouth currently contributes around 14% of the UK’s refining capacity, and its closure will deepen the nation’s reliance on fuel imports.
- The decision comes amid declining fuel demand, exacerbated by future bans on petrol and diesel vehicles, as announced by Petroineos.
- The move is expected to result in the loss of 400 jobs, drawing strong criticism from political leaders and unions.
- Efforts are underway to repurpose the site, alongside government investments aimed at mitigating economic impacts.
The Grangemouth oil refinery, responsible for approximately 14% of the United Kingdom’s refining capacity, is set to cease operations in 2024. This decision, announced by Petroineos, a joint venture between Ineos and PetroChina, marks a significant shift in the UK’s energy landscape as it increases the country’s dependency on imported fuels.
Petroineos attributed the closure to declining domestic demand for motor fuels, driven by policy changes such as the upcoming ban on new petrol and diesel cars. Frank Demay, Chief Executive at Petroineos Refining, highlighted the challenges posed by the ageing infrastructure. ‘With a ban on new petrol and diesel cars due to come into force within the next decade, we foresee that the market for those fuels will shrink,’ Demay stated.
The refinery, originally established in 1924, has been a key supplier of fuels across Scotland and northern England. Despite significant investments, ongoing financial difficulties have led to accumulated losses. The site requires an additional £40 million to remain operational beyond next spring. In response to its closure, Petroineos plans to convert the location into an import and export fuel terminal, aiming to maintain supply continuity for forecourts and other customers.
Political leaders and unions have expressed concerns regarding the socio-economic impact of the closure. UK Energy Secretary Ed Miliband expressed ‘deep disappointment,’ while Scottish officials and union representatives labelled the move as ‘industrial vandalism.’ Sharon Graham, General Secretary of the Unite union, criticised the lack of job protection measures and called for government intervention to secure alternative employment options, stating, ‘This dedicated workforce has been let down.’
The workforce at Grangemouth will see significant reductions, with around 280 positions expected to be lost within three months of closure. Approximately 75 essential staff will be retained for terminal operations, and another 100 will oversee initial decommissioning efforts. The UK and Scottish governments have initiated studies to explore future uses for the refinery, including hydrogen and sustainable aviation fuel, although these alternatives will not be implemented before the shutdown.
Both governments have pledged an additional £20 million investment to the existing £80 million Falkirk and Grangemouth Growth Deal to stimulate local economic growth and support diversification. Furthermore, there is potential exploration into using the National Wealth Fund to assist with repurposing the refinery site.
Local businesses are bracing for broader economic fallout. Hisashi Kuboyama of the Federation of Small Businesses in Scotland cautioned that the ripple effect from the refinery’s closure could jeopardise numerous jobs within the supply chain. This places further strain on the regional economy already impacted by the decision.
The closure of the Grangemouth refinery highlights a critical transition in the UK’s energy strategy while posing significant challenges to the local workforce and economy.
