Scotland's only oil refinery to shut with hundreds of jobs at risk at Grangemouth

Hundreds of jobs are expected to be lost as Grangemouth Refinery prepares to close down.

The only operating crude oil refinery in Scotland, and one of only six remaining in the UK, supplies 80% of the country’s fuel.

The refinery in Falkirk is responsible for 4% of Scotland’s GDP and approximately 8% of its manufacturing base, according to owners Petroineos.

Refinery operations are expected to cease in under 18 months in spring 2025.

Petroineos, a joint venture between PetroChina and INEOS, said the site would become an import and distribution hub.

First Minister Humza Yousaf said the scale of job losses could be “quite significant”.

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Unite the union said it will “leave no stone unturned” in its fight to save jobs at Grangemouth.

“The news will come as a shock to the local community but Unite is going to do everything it can to protect jobs in this vital industry,” the Unite’s Scottish secretary Derek Thomson told STV News.

“It could mean a transfer over to different parts of the business but just now it’s too early to go into the details.

“We need more proposals and we want to work with the Scottish Government and the UK Government to come to some sort of conclusion as to where this will end up.

“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.”

“This is the start of a journey to transform our operation from one that manufactures fuel products, into a business that imports finished fuel products for onward distribution to customers”

Franck Demay, chief executive officer at Petroineos Refining

The business said demand for the fuels it produces was expected to decline and that the energy transition was well under way.

Following a busy period brought on by the war in Ukraine, Petroineos said it faced a future of “unsustainable levels of losses”.

STV News understands Petroineos spoke with the Scottish Government and unions on Tuesday after briefing staff earlier in the day.

In an email to staff, refinery manager Russell Mann said: “We anticipate that works necessary for import flexibility at Finnart and Grangemouth will take around 18 months to complete and our current intention is to continue refinery operations until Spring 2025, and potentially beyond.”

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Mr Mann said plans to transition Grangemouth to an import terminal had been ongoing with shareholders for months.

“We will shortly begin work to modify our infrastructure so we can, if necessary, operate as a fuel import and distribution terminal at Grangemouth,” he said.

“This investment will future-proof our business, enhance the site’s resilience, and secure our status as a national fuel hub for decades to come.”

Staff were due to be told on the completion of 2023’s TAR programme – Petroineos’ project and planned shutdowns.

But issues with this has resulted in delay and the company said it “cannot delay work on import logistics any longer”.

Mr Mann said the message to staff “marks the start of a regular programme of engagement with all colleagues on the changing nature of our business”.

In September, Ineos Grangemouth CEO Andrew Gardner told STV News closing down all together is not a viable solution.

It is Scotland’s largest industrial site, employing almost 2,000 people directly across three businesses, and up to 7,000 contractors at peak turnaround activity.

In 2019, exports of petroleum and chemical products from the site accounted for 6% of all Scottish exports to outside of the UK.

It comes as INEOS’ billionaire founder Sir Jim Ratcliffe is poised to take a 25% stake in Manchester United.

It is understood Ratcliffe is on the verge of a £1.25bn deal, but sources have indicated that an announcement may not come until next week.

Franck Demay, chief executive officer at Petroineos Refining, said it was “business-as-usual” at Grangemouth.

“This is the start of a journey to transform our operation from one that manufactures fuel products, into a business that imports finished fuel products for onward distribution to customers,” he said.

“Throughout this process, our focus will remain on the safe production and reliable supply of high-quality fuels to our customers in Scotland, the north of England, and Northern Ireland.”

Mr Demay said the business was committed to regular engagement with staff about the changes to the site.

The Scottish Tories described the situation as “devastating” for Grangemouth refinery staff and a “hammer blow” for the national and local economies.

Douglas Lumsden, the party’s net zero spokesman, said the “hostile attitude” shown by the Scottish Government and the UK Labour Party towards oil and gas “will have been a factor” in the decision, although it is unclear if this is the case.

“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,” he said.

Scottish Green MSP Gillian Mackay described the news as an “appalling way to treat workers who only months ago were being promised that they would be part of a Just Transition for the site”.

“Sir Jim Ratcliffe and his executives must explain themselves to the community that has for 100 years worked and loyally supported this site, and fully expected a better and more sustainable future that would support generations more,” she said.

First Minister Humza Yousaf said it would be a “very worrying time” for the workers affected.

“The Scottish Government is very prepared to work with the owners of Grangemouth and, of course, with the trade unions in order to try to ensure a sustainable future for Grangemouth,” he said.

Asked if his Government bears some responsibility for the situation, he said: “First and foremost, remember decisions about oil and gas licensing are made by the UK Government.”

A Department for Energy Security and Net Zero spokesperson said: “We understand that these reports will be concerning for the refinery’s workers, and are seeking assurances from Grangemouth on how they are supporting employees and the long-term future of the site.

“We remain confident in our fuel supply and the government will continue to 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.”

Grangemouth: Icon of Scottish manufacturing

Insight Courtney Cameron Reporter

The billowing smoke from the chimneys of the Grangemouth oil refinery has been a landmark for decades.

The industrial site, which is now operated by Petroineos, was built in the 1920s. Generations of families from the Falkirk area and beyond have worked here – meaning a move towards net zero is the talk of the town.

Grangemouth is one of the most deprived towns in the Falkirk area, and with the news there’s going to be changes at some of its biggest employers, its leaving concerns about businesses here about what the future holds.

Grangemouth has become synonymous with its industrial site, which has produced fuel for Scotland and beyond for almost a century.

But the town’s biggest employer – and polluter – operated by petrochemicals giant Ineos, has been under the spotlight for its green credentials.

The Scottish Government has been looking at how to decarbonise the industry, without sacrificing jobs.

In a statement in September, the Scottish Government said Grangemouth would play a key roll in decarbonising industry, and it was working closely with the site and the community to make sure they have a say in the town’s future.

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