The Grangemouth oil refinery in Scotland is set to close in 2024, leading to significant economic implications.
- The closure, announced by Petroineos, will result in approximately 400 job losses.
- The shutdown is attributed to declining demand for motor fuels and the high costs of maintaining the ageing infrastructure.
- Political leaders and unions have criticised the decision, citing its potential economic ripple effects.
- Plans for transforming the site include a new import terminal, but other future options remain uncertain.
The Grangemouth oil refinery, Scotland’s last, is confirmed to close in 2024. This decision comes from Petroineos, a joint venture between Sir Jim Ratcliffe’s Ineos and PetroChina, in response to the declining demand for motor fuels, exacerbated by the upcoming ban on new petrol and diesel cars. “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,” Frank Demay, Chief Executive at Petroineos Refining, stated. The costs of maintaining the nearly century-old refinery compound the economic feasibility of its continued operation.
Petroineos’s announcement has been met with criticism from political leaders and union representatives. UK Energy Secretary Ed Miliband and Scottish Energy Minister Gillian Martin have expressed their disappointment, labelling the move as “industrial vandalism.” Currently, the Grangemouth facility accounts for approximately 14% of the UK’s refining capacity. While the UK remains a net exporter of petrol, it still relies heavily on imports for diesel and jet fuel.
To mitigate the disruption caused by the closure, Petroineos plans to transition the Grangemouth site into an import and export fuel terminal, ensuring ongoing supply. However, this strategy will not prevent the loss of about 280 jobs within three months of the refinery’s closure. Additional roles will be maintained temporarily to oversee the decommissioning and demolition work.
Beyond employment, the refinery’s closure is expected to have broader economic consequences. The Federation of Small Businesses in Scotland has warned of potential negative impacts on supply chains that service smaller businesses, affecting jobs beyond the 400 directly linked to the refinery. Sharon Graham of the Unite union criticised both the company and government officials for their perceived failure to secure alternative employment opportunities for the workforce.
Looking forward, the UK and Scottish governments have proposed investments through the Falkirk and Grangemouth Growth Deal and the National Wealth Fund to explore alternative uses for the site. These include prospects for hydrogen, biofuels, and sustainable aviation fuel manufacturing, although such advancements are unlikely before the closure takes effect.
The impending closure of Grangemouth refinery marks a pivotal shift in the UK’s energy landscape, prompting significant economic and strategic considerations.
