Wednesday, November 22, 2023

Scotland’s only oil refinery to shut amid fears of Starmer-led crackdown
LABOUR IS NOT THE GOVERNMENT,YET

Jonathan Leake
Wed, November 22, 2023 

Grangemouth refinery is to halt operations by 2025 - Jane Barlow/PA

Sir Jim Ratcliffe’s energy and chemicals empire is to shut Scotland’s only oil refinery amid surging energy costs and fears that a Labour crackdown on the North Sea will make it unviable.

Grangemouth refinery is to halt operations by 2025, putting hundreds of jobs at risk and leaving Scotland and the north of England dependent on imports for its fuel. Analysts said the closure is likely to raise forecourt costs for drivers.

Petroineos, the joint venture between PetroChina and Sir Jim’s Ineos that runs the refinery, on Wednesday announced plans to stop refining at Grangemouth and turn the complex into a fuel import terminal.

It means the site will stop processing crude oil in early 2025, wiping out the jobs and skills associated with the refining side of the business. As many as 500 roles are feared to be at risk.

The announcement comes a month after Andrew Gardner, the chairman of Petroineos, warned that Labour’s plans for the North Sea put Grangemouth at risk.

Mr Gardner told The Telegraph that Sir Keir Starmer’s promise to ban new oil and gas projects in the North Sea risked leaving Grangemouth without enough fuel to refine.

He said: “We want to keep jobs and manufacturing here but Labour hasn’t understood that we need supplies. I need natural gas, ready, cheap and available as a feedstock.”

In an email to staff on Wednesday, Petroineos said it would “soon be unable to compete effectively with bigger, more modern and efficient refineries in the Middle East, Asia and Africa”.

The announcement comes as Labour are 20 points ahead in the polls, with an election looming next year.

Grangemouth is the only fuel refinery in Scotland and one of only six remaining in the UK. It supplies 80pc of Scotland’s fuel and has been a vital piece of national infrastructure for the past century.

It also supplies raw materials to the adjacent petrochemical and plastics plant run by Ineos Olefins and Polymers (Ineos O&P) whose raw plastics and polymers go into UK products ranging from construction materials to clothing.

Last year Ineos Grangemouth, which owns Ineos O&P, reported a loss of nearly £300m, compared with a £10m profit in 2021, which it blamed largely on the surging cost of energy.

The refinery operation also faces its own high energy bills.

Such costs are compounded by political uncertainty. Grangemouth is fed by the Forties Pipeline network, which links it to 80 of the UK’s offshore oil and gas fields. Most of those fields are in decline but would normally be replaced by new wells. However, Labour plans to ban new drilling if it wins power.

Ashley Kelty, a director and energy analyst at Panmure Gordon investment bank, said the decision to close the facility would “impact fuel security for the UK and will potentially lead to higher costs on the forecourts as imported fuel costs will have to be passed onto consumers”.

He said: “This is another sign of a lack of governmental support for key industries – mainly through an ignorance of the energy transition and belief that renewables are able to fill the gaps.”

Douglas Lumsden, the Scottish Tories’ shadow energy secretary, said: “This is devastating news for the workers at Grangemouth and will be a hammer blow for the local and national economy if it goes ahead.

“The hostile attitude shown towards Scotland’s oil and gas industry from the SNP-Green government – as well as Keir Starmer and Labour’s betrayal of the sector – will have been a factor behind this decision.

“They all fail to recognise the need for oil and gas – such as the refinery at Grangemouth – to be part of Scotland and the UK’s energy mix for years to come.”

Franck Demay, chief executive of Petroineos Refining, said: “As the energy transition gathers pace, this is a necessary step in adapting our business to reflect the decline in demand for the type of fuels we produce.”

Grangemouth accounts for 4pc of Scottish GDP and 8pc of the country’s manufacturing base.

In its email to staff, Petroineos said: “We operate in a global industry that is highly competitive and Grangemouth – like many other refineries – will soon be unable to compete effectively with bigger, more modern and efficient refineries in the Middle East, Asia and Africa.

“The energy transition is also well underway and demand for road fuels we produce has started to decline and is expected to reduce steadily over the coming years.”

Mr Kelty said: “The anti-business Scottish government and militant trade unions have made it very difficult for Ineos to make improvements in the past, so they would be partly to blame for this decision.”

Sharon Graham, general secretary of trade union Unite, said: “This proposal clearly raises concerns for the livelihoods of our members but also poses major questions over energy supply and security going forward.”

Derek Thomson, Unite Scottish secretary, said: “Unite continues to engage with Petroineos, and we urge other stakeholders such as the Scottish and UK governments to do the same due to the implications that this proposal will have for the economies of the devolved and reserved administrations.

“Every option must be on the table in order to secure the hundreds of highly skilled jobs based at the Grangemouth complex for the long-term.”

Scottish Liberal Democrat economy spokesman Willie Rennie called on the UK and Scottish governments to “step up”, calling it a “dark day for the workers at Grangemouth”.

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