Anger as ScotGov offers no hope of saving the Grangemouth refinery

The Herald revealed in 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 sparking fears for thousands of jobs within the plant as well as outside contractors.

Staff were told that a start had been made on projects that will see the Grangemouth plant transition from a refinery to potentially an imported fuels depot over the next five years.

Refinery owner Petroineos - the joint venture between Ineos Group - the petrochemicals giant controlled by billionaire tycoon Sir Jim Ratcliffe - and China’s state-backed PetroChina - which bought the refinery in 2005, said it will remain a refinery until spring 2025 and that jobs would remain safe in the short term.

READ MORE: Grangemouth: Jobs at risk as Sir Jim Ratcliffe-backed refinery to shut

Ms McAllan has told MSPs there was a "commitment to explore every avenue to accelerate the build out of low carbon new projects at the cluster" but there not words of comfort for those who think that the refinery can still be saved.

She added: "So this remains my priority as I take up post in my first few days as Cabinet Secretary for wellbeing economy net zero and energy".

The economy secretary said she was "emphasising the need for urgency to make sure that we can maximize new opportunities and minimize the gap between the refineries transition, and those new opportunities becoming available".

But her critics said she had offered no hope of saving the refinery in the longer term.

It comes workers at the refinery slated the Scottish and UK governments over their failure to jointly develop proposals which could help protect hundreds of jobs at the complex.

Unite has released details of a survey involving hundreds of refinery workers, including contractors which "strongly indicates" that the workforce believe there has been a "collective failure" to support them following the announcement by Petroineos to being the transition.

The survey found that 93% agreed that the potential impact of any potential closure on the local Grangemouth economy and that of surrounding communities would be ‘severe'.

Some 88% said that politicians were not doing enough to support and protect jobs at Grangemouth; And only 11% expressed ‘confidence’ in finding a “like for like” job in the event of refinery operations ceasing at the Grangemouth site; Only three percent expressed confidence in the ongoing “just transition” plans for oil and gas workers.

Petroineos has commenced early study work focused on the future establishment of a biofuels refinery at Grangemouth capable of producing sustainable aviation fuel.

And Ms McAllan said that taken to fruition it could see Grangemouth become home to "Scotland's only sustainable aviation fuel production plant, capable of meeting future aviation demands for decades to come".

She said a transition to hydrogen production and biofuels manufacturing potentially offer the opportunity to transition to "new sustainable jobs".

She said: "The Grangemouth refinery is of strategic importance to Scotland, therefore, as you would expect, the Scottish government has engaged with Petroneos and other businesses as well as our public sector partners regarding the future of the cluster for some time. However, following their announcement last year ministers have spearheaded an enhanced program of engagement...

"Grangemouth has a long industrial tradition, which the Scottish Government is determined to see preserved."

Formal notification of the move for the eventual closure of the refinery was made to the UK Government, as is required under the Energy Act 2023, and the Scottish Government on the morning of staff being told in November.

But Iain Hardie, head of legal and external affairs at the refinery operator, Petroineos Manufacturing Scotland Ltd, said this was "in addition to their having been aware of the concept, the studies and planning for that potential outcome for well over a year".

Scottish Conservative shadow net zero, energy, and transport secretary Douglas Lumsden questioned what had been done in preparation for the future demise of the refinery as it was "clear they knew what was coming".

The North East Scotland MSP told the Scottish Parliament that the workers had been "let down by the Scottish Government"

But Ms McAllan asked Mr Lumsden and his colleagues to "not politicise this matter" while insisting the Scottish Government that they were informed of the transition from a refinery in November.

UK ministers have also offered no hope of intervening to save Scotland's only oil refinery, as it emerged North Sea revenues over two years are set to soar to £17.2bn.

Calls have been made to use a tiny fraction of the profits from the North Sea to save the Grangemouth refinery.

It has been estimated that £60-80m would be needed to re-start the hydrocracking unit at Grangemouth which some say will pave the way to profitability and a lifeline for the refinery and hundreds of jobs.

In general major products produced from hydrocracking are jet fuel and diesel but Liquefied Petroleum Gas (LPG) can also be produced.

Experts say the cost of repairing the Grangemouth unit which went offline in April, last year, and has not been working since has played a key part in its anticipated closure.

In an appeal response, energy security and net zero minister Graham Stuart said the decision to close the refinery was a commercial decision for Petroineos to make.

His stance came in a response to an appeal from former justice secretary now East Lothian MP and Alba Party deputy leader Kenny MacAskill who spearheaded the launch of a campaign to save the refinery.

The fair energy prices campaigner said the Scottish Government's stance was "pathetic" and that their action is "entirely inadequate".

"Biofuels are all well and good. But closure beckons in 2025 and what will remain in skills and plant when years from now biofuels refining at scale begins," he said.

"They need to find a backbone. Scottish oil delivered billions last year with more anticipated this year.

"They need to get off their knees and start acting to save it."

Alba's National Council has backed the workers at Grangemouth in their fight to retain the oil refinery as a national asset.

It produces a range of fuels including petrol, diesel, kerosene, LPG and jet fuel and currently employs around 500 and it is understood there are hundreds of contractor workers that support staff. Ineos employs another 450 staff on the site at Forties Pipeline Services and a further 1,000 in its petrochemicals business.

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

It is the primary supplier of aviation fuel for Scotland’s main airports, and a major supplier of petrol and diesel ground fuels across the central belt.

The company that operates the refinery made losses totalling nearly £360m in the pandemic-hit years of 2020 and 2021.

The Herald can reveal much of that was down to what is called an "impairment charge" which relates to a drop in the value of its property, which counts as a loss on financial statements.

Some £383m dropped from its value, in the wake of resizing its operations from November 2020. It then announced the closure of one of its crude distillation units and its fluid catalytic cracking unit.

The cut in capacity of the refinery led to 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.

In the two years before the pandemic, it made losses of £26.066m.