Even though it was an eventuality well trailed by Petroineos back in November, confirmation last month Grangemouth oil refinery would be closing was sad news indeed. The loss of hundreds of jobs is obviously lamentable and so, too, is the impending end of operations at one of Scotland’s most famous industrial sites. The Grangemouth refinery can trace its roots back to 1924.

Petroineos, a 50-50 joint venture between PetroChina and INEOS, had signalled in November it planned to close the refinery. It noted it had, back then, “outlined plans to transform the Grangemouth refinery site into a finished fuels import terminal and distribution hub in order to safeguard Scotland’s supply of fuels for the future”.

As the months passed, some dared to hope it might have a change of heart on its plans to close. That, unfortunately, never looked likely.

On September 12 Petroineos declared its “intention to cease refinery operations at Grangemouth during the second quarter of 2025”.

Its spelling out of the rationale did nothing to provide any hope the closure could be averted.

There was plenty of sincere sympathy from politicians but both the UK and Scottish governments look powerless in the face of the decision, and are left to undertake the albeit important work of trying to mitigate the ensuing damage.

Frank Demay, CEO at Petroineos Refining, spelled out the reality of the situation, putting it firmly in the context of the drive to net zero.

Petroineos highlighted the refinery’s age, the amount invested in it, and the cost of operating it. It also flagged the substantial financial losses sustained, albeit these have been incurred over a protracted period.

Mr Demay said: “The energy transition is happening now and it is happening here. Demand for key fuels we produce at Grangemouth has already started to decline and, 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 further. That reality, aligned with the cost of maintaining a refinery built half a century ago, means we are exploring ways to adapt our business.”

Petroineos also underlined the highly competitive nature of the global refining industry: “Grangemouth is the UK’s oldest refinery and currently faces significant challenges due to global market pressures and the energy transition.

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Refining is a globally competitive industry and Grangemouth is increasingly unable to compete with bigger, more modern and efficient sites in the Middle East, Asia and Africa. Due to its size and configuration, Grangemouth incurs high levels of capital expenditure each year just to maintain its licence to operate. This annual outlay on essential planned maintenance and running repairs has been consistently higher than the company’s earnings over the past decade.”

Quantifying its investment and losses, it added: “Petroineos is a joint venture between INEOS and PetroChina and those shareholders have invested more than $1.2bn since 2011 to maintain the refinery’s safe operation, recording losses in excess of $775m during the same period.”

Mr Demay noted on September 12 that “an import terminal requires significantly fewer people to operate than a refinery, so Petroineos will…enter a formal consultation process with the site’s 475 employees and their representatives on the details of the transformation plan, which is expected to lead to a net reduction of approximately 400 roles over the next two years”. No one should underestimate the effect of losing high-quality jobs on this scale.

One of my columns underlined the size of the Grangemouth refinery and highlighted the fact this operation could trace its roots back about 100 years, observing: “Sadly, neither this scale and rich history, nor the skills and labours of the site’s workers, have been enough to protect the refinery from brutal market forces.”

The column noted the Federation of Small Businesses had rightly described confirmation the Grangemouth refinery would be closed as “devastating”. It concluded: “While the closure might have been inevitable given the energy transition, global market forces, and the cold financial decisions of major companies, that does not make it any less ‘devastating’.”

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The thorny issue of Scottish income tax has again been in focus in the last month. A survey of more than 300 Scottish businesses by the University of Strathclyde’s Fraser of Allander Institute, published on September 17, made for interesting reading indeed.

The Scottish Government has, of course, used its devolved powers in a way that means there is a greater income tax burden for higher earners north of the Border relative to those in the rest of the UK.

More than half of the businesses surveyed by Fraser of Allander have experienced “little to no impact” from the Scottish Government’s income tax policy, although a few say they are considering moving operations or investments south of the Border.

Twenty eight per cent reported no impact and 29% felt only “a little” effect. 17% experienced a “fair amount” of impact, with another 17% stating the policy had a “significant” effect on their operations.

Another of my columns observed: “For the more hysterical of the Scottish Government’s critics, a survey on businesses’ views of how devolved income tax policy has affected them might have come as something of a surprise.

“If you were to believe this overwrought contingent, you would think the greater income tax burden for higher earners in Scotland that has resulted from devolved income tax policy had created some kind of economic Armageddon and is killing off business. Clearly, from the official data, anyone can see that it has not.”

Elsewhere on the Scottish political front, the last month has also seen the 10th anniversary of the independence referendum. New research from independent property consultancy Knight Frank, published to coincide with this September 18 anniversary, showed overseas investors replaced UK institutions as the dominant force in Scotland’s commercial property market in the decade following the 2014 independence referendum.

The Knight Frank report revealed commercial property north of the Border attracted much more international interest in the decade following the 2014 referendum than in the 10 years prior to the vote.

The consultancy’s study of Real Capital Analytics’ data found that, in the decade leading up to the 2014 vote, UK institutional investors accounted for the largest share of investment in Scottish commercial property, at 36% on average.

However, during the decade since the vote, international investors averaged nearly half of investment volumes at 48%, rising from 31% between 2004 and 2013. This is well ahead of UK institutions’ annual average of 26% in the 10 years since the referendum.

Knight Frank observed that average annual investment volumes in Scotland’s commercial property market have “largely remained consistent”, at £2.45 billion pre-referendum and £2.48bn in the decade that followed.

This article was first published in The Herald's Business HQ Monthly supplement