The shutdown of the Grangemouth oil refinery in 2024 marks the end of an era for Scotland’s last refinery, impacting jobs and fuel reliance.
- Petroineos has announced the closure, attributing it to declining fuel demand and high operational costs.
- Political leaders and unions have criticized the decision, describing it as “industrial vandalism.”
- The UK may face increased import reliance for diesel and jet fuel, although it remains a net petrol exporter.
- Plans for an import-export terminal and potential alternative uses for the site aim to mitigate impacts.
Petroineos, a joint venture between Ineos and PetroChina, has announced the closure of the Grangemouth oil refinery in 2024. The decision is driven by a decline in domestic demand for motor fuels, further impacted by the upcoming ban on new petrol and diesel cars. According to Frank Demay, Chief Executive at Petroineos Refining, “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.” The financial burden of maintaining the nearly century-old facility also played a significant role in the closure decision.
Political leaders have expressed substantial concerns over the closure’s ramifications. UK Energy Secretary Ed Miliband and Scottish counterpart Gillian Martin, along with union leaders, have described the decision as “industrial vandalism.” Grangemouth accounts for 14% of the UK’s refining capacity, supplying motor fuels and other essential products across Scotland and northern England. Although the country stays a net petrol exporter, it largely relies on imports to meet diesel and jet fuel demands.
In response to the closure, Petroineos plans to repurpose the site as an import and export fuel terminal, which will ensure the continuity of supply to forecourts and other clientele. The refinery has struggled with financial issues with reported losses amounting to $775 million since 2011, despite a considerable investment of $1.2 billion. Operating the aging infrastructure beyond next spring would require an additional £40 million investment, which is deemed unsustainable.
Employment impacts are significant, with approximately 280 jobs expected to be lost within three months post-closure. However, about 75 workers will continue at the new terminal, while another 100 will assist in decommissioning operations over the following year. Studies have been commissioned by the UK and Scottish governments to explore potential future uses of the site, with options being considered for hydrogen, biofuels, and sustainable aviation fuel, though these alternatives are not anticipated to be ready before the plant’s closure.
The closure’s economic repercussions extend beyond direct job losses. Multiple small businesses dependent on the refinery are at risk, potentially jeopardizing additional jobs. Hisashi Kuboyama from the Federation of Small Businesses in Scotland warns of these broader effects, stating that “the knock-on effect on the supply chain will have an impact on numerous small businesses across the length and breadth of the country, putting many more jobs than the 400 on site at risk.” Meanwhile, Sharon Graham, General Secretary of the Unite union, has criticized both Petroineos and political leadership for not securing alternative employment options, asserting that “the road to net zero cannot be paid for with workers’ jobs.”
While other petrochemical operations at Grangemouth will persist, the refinery’s closure highlights a pivotal shift in the UK’s energy landscape. This development has sparked discussions surrounding the future of fuel supply reliance and the fate of the site and its surrounding community.
The closure of the Grangemouth oil refinery will leave a profound impact on both local employment and the UK’s energy sector, demanding strategic adjustments.
