Scotland faces becoming 'third-world' fuel-producing nation

The revelation has come as hundreds of jobs are at risk over plans to close down the nation's only oil refinery at Grangemouth, part-owned by the Ineos Group, the petrochemicals giant controlled by billionaire tycoon Sir Jim Ratcliffe.

The transition from a refinery to potentially an imported fuels depot is expected to take up to five years came as Sir Jim Ratcliffe moved to take a 25% stake in Manchester United in an estimated £1.25bn deal.

Refineries are crucial for turning unprocessed crude oil into products we can use like diesel and petrol for cars.

The Grangemouth plant has a refining capacity of 150,000 barrels per day while Grangemouth plays a leading role in supplying Scotland’s fuel demand, and is of strategic importance to the nation's energy supply and regional economic development.

READ MORE: Sir Jim Ratcliffe's stricken Scots refinery incurred £360m in losses

Its importance is further cemented as it is connected to the Forties Pipeline System (FPS) - which carried about a third of the UK's oil - for its intake from the North Sea and is connected to Finnart Ocean Terminal for crude oil import and finished products export. The original 32-inch pipeline was opened in 1975 to transport oil from the Forties Oil Field, the UK’s first major offshore oil field.

It is estimated that the Grangemouth refinery produces around a sixth of all the petroleum products delivered across the UK.

The 1,700-acre site supplies 70% of the fuel to Scotland's filling stations as well Northern Ireland and the north of England.

New analysis, based on data produced by the World Population Review and Oil and Gas Journal shows that Scotland produces an estimated 748,840 barrels of oil out of the 772,000 in the UK, which is ranked 21st in a list of the biggest oil-producing countries in the world.

Scotland would be the only one of the top 25 major oil producing nations that would not have a refinery.

There would be five others remaining in the UK, after the Grangemouth closure.

According to the data, of the 82 oil-producing countries there are only five that are without an oil refinery or are not in the process of developing one.

The biggest of those, the Republic of Congo, produces about a third of the crude oil coming from Scotland - delivering around 260,000 barrels a day. The others are producing an even tinier fraction of what Scotland delivers - Trinidad and Tobago (61,000 barrels), New Zealand (8,600), Belize (1000) and Barbados (1000).

Scotland's position as a 'third world' fuel-producing nation is expected to be delivered to ministers on Tuesday at the House of Commons in a debate led by former justice secretary now East Lothian MP and Alba Party deputy leader Kenny MacAskill who says that Scotland is being placed alongside developing nations in terms of producing petroleum products.

"Third world status is what we face with closure of the Grangemouth refinery," he said.

He says with closure, the oil will have to be shipped down south and refined in one of the five remaining oil refineries in the UK or sent abroad.

He is concerned that once refined into petrol and diesel we can use, it will return to Scotland and ordinary Scots will "pay a premium at the petrol pump".

The fair energy prices campaigner said: "It cannot be that the energy capital of Europe is left without a functioning oil refinery. The Scottish Government must step in, as it did twice under the leadership of Alex Salmond, and save Grangemouth from closure, thus saving the thousands of jobs that are dependent on it, and saving already hard-pressed Scots from being ripped off further.

"We need an acceptance of the urgency and necessity of saving it [Grangemouth].  It will require action by the Scottish Government, UK and the owners."

The Herald revealed at the end of November, that bosses at the Petroineos plant in Grangemouth established almost a century ago, told staff that Scotland "simply won't be big enough to support a fuels refinery" due to falling demand.

The refinery, which the joint venture between Ineos Group and China’s state-backed PetroChina bought in 2005, has long been seen as vulnerable to cuts given its age.

Staff were told that a start has already been made on projects that will see the Petroineos plant transition from a refinery to potentially an imported fuels depot.

Petroineos told the Herald it will remain a refinery until spring 2025 although managers have indicated to staff the transition would take place over the next five years. They say the preparatory work will make it possible to import petrol, diesel, aviation fuel and kerosene into Scotland from vessels arriving via the Firth of Forth.

They say the move will provide "greater operational flexibility and safeguard the site as a national fuel hub for decades to come".

The Herald revealed that the refinery has incurred huge losses of over £360m over two years and sources have said that means that any government attempt to save the nation's only oil refinery would not be viable.

The refinery at Grangemouth, one of only six remaining in the UK, had been operating since 1919 and was one of the first to transform crude oil in the UK.

It produces a range of fuels including petrol, diesel, kerosene, LPG and jet fuel and currently directly employs around 500.

Petroineos cut the capacity of the refinery with an estimated loss of up to 200 jobs in 2020, as the hit to fuel demand from the coronavirus pandemic hit profits across the industry.

According to the company, which received £415,546 in furlough payments under the taxman's Covid furlough scheme, the resized refinery allowed it to concentrate on product sales to inland markets and reduce a reliance on exports.

A Scottish Government spokesman said: “The Scottish Government’s firm preference is that the refinery should continue operating for as long as possible. Petroineos has outlined that the global factors at play are extremely challenging.

“As the Wellbeing Economy Secretary has outlined, the Scottish Government is looking at every possible opportunity and avenue that there might be for extending the life of the refinery. This would provide critical time and space for the business to bring forward new transition opportunities across Grangemouth and ensure jobs are protected.

“We recognise the important role which Grangemouth plays in meeting fuel demand in Scotland.

“The Scottish Government is committed to working with industry and the UK Government to secure a long term sustainable future for Grangemouth and those who live and work there.

“That future should reflect our ambitions for decarbonisation and a just transition for Scotland’s industrial sector. We will publish our Energy Strategy and Just Transition plan by the spring.”

A Department for Energy Security and Net Zero spokesperson added: “We are increasing transparency in the road fuel market to ensure drivers get a fair price at pumps across the UK. Our plan is working, and petrol prices are now at a level not seen since early October 2021.

“We remain confident in our fuel supply and the Government will continue to back the North Sea oil and gas sector and green industries, to protect our energy security, support jobs, attract investment and create opportunities for communities in Scotland.

“We are seeking assurances from Grangemouth on how they are supporting employees and the long-term future of the site."