The closure of the facility at Grangemouth comes despite Project Willow, a study funded by the UK and Scottish governments looking at ways to secure a future for the site.
Ministers have urged the company to keep “refining open for as long as possible.”
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In a statement, Frank Demay, Chief Executive Officer at Petroineos Refining, 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.”
The company first announced plans to close the refinery last November, with the site turned into a finished fuels import terminal and distribution hub.
However, this “requires significantly fewer people to operate.”
The company will enter a formal redundancy process with unions.
They say they expect the transformation to “lead to a net reduction of approximately 400 roles over the next two years.”
Mr Demay, said: “Unfortunately, a terminal would require only around one-fifth of the current refinery workforce.
“Therefore we will soon enter an information and consultation process with representatives of our employees to discuss the proposals.
“We have already agreed to move from the UK statutory minimum redundancy terms to an 18-month package and if plans proceed we intend to do everything we can to reduce the impact on our people.
“We will of course be seeking to minimise compulsory redundancies as far as possible.”
Shortly after the news of the closure, the UK and Scottish governments unveiled a “three-point plan for a just transition for the workforce and community.”
(Image: Chris Watt Photography)
The package includes £20m of new joint funding from the UK and Scottish governments on top of £80m promised for the Falkirk and Grangemouth Growth Deal, to invest “in local energy projects to create new opportunities for growth in the region.”
The governments have also made immediate career support to help workers made redundant find new employment.
Project Willow has also identified a shortlist of three credible options to “begin building a new long-term industry at the refinery site, including low carbon hydrogen, clean eFuels and sustainable aviation fuels.”
The UK Government has also said that the new National Wealth Fund could back projects that have the “potential to yield a viable long-term future for the site.”
12 Sep 2024
Unite vows to fight for jobs as Grangemouth refinery closure announced following a period of betrayal and inaction
The government now needs to “put its money where its mouth is” on just transition
Unite, the UK’s leading union, has vowed to explore all avenues to preserve high quality jobs at Grangemouth following the announcement that PetroIneos will go ahead with its plans to close its refinery.
PetroIneos confirmed today that it intends to close the refinery at Grangemouth between April – June 2025 and become an import and export only facility. The announcement places in jeopardy the jobs of the 500 workers directly employed (represented by Unite) at Grangemouth and thousands more in the supply chain.
There is widespread fury within the workplace due to the failure of the bosses and politicians to ensure the future of the site.
Unite general secretary Sharon Graham said it was “an act of industrial vandalism, pure and simple.”
She added: “This dedicated workforce has been let down by PetroIneos and by the politicians in Westminster and Holyrood who have failed to guarantee production until alternative jobs are in place.
“This is now the last chance for this Labour government to show whether its really on the side of workers and communities. The road to net zero cannot be paid for with workers’ jobs.
“The government must put its money where its mouth is to ensure the jobs are safeguarded. This is the only refinery left in Scotland and it must remain. There are alternative plans.
“This is yet another example of workers paying for a crisis they did not create while billionaire owners laugh all the way to the bank “
Taking to X, First Minister John Swinney said he was “deeply disappointed that Petroineos have confirmed their decision to close the Grangemouth refinery in 2025.”
He added: “My immediate thoughts are with the workforce. We will continue to engage closely with the UKG to deliver an investment plan, which includes a £100m package and immediate career support for workers, to help secure an industrial future for the site.”
I am deeply disappointed that Petroineos have confirmed their decision to close the Grangemouth refinery in 2025. My immediate thoughts are with the workforce. (1/2)
— John Swinney (@JohnSwinney) September 12, 2024
UK Government Energy Secretary Ed Miliband said the news was “deeply disappointing.”
He added: “We will stand with the workforce in these difficult times, that is why we are announcing a package of investment to help the workforce find good, alternative jobs, invest in the community and serve a viable industrial future for the Grangemouth site, with potential for future support from the National Wealth Fund.
“Unlike in the past, the government is working in lockstep with the Scottish Government across every front. Workers and their families should be in no doubt this is a government that stands with workers, trade unions, and businesses to fight for jobs and investment in Scotland.”
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Scottish Government Cabinet Secretary for Net Zero and Energy Gillian Martin added: “My immediate thoughts are with the workforce. This is a very challenging time for them and their families, and we will support every worker affected by this decision.
“We are working very closely with the UK Government and together we have communicated our disappointment to Petroineos today.
“The Scottish Government has consistently made clear our preference was for refining to continue as long as possible, and we have continued to press the shareholders for a positive decision until the 11th hour.
“This significant package of support combines immediate help for affected workers and a long-term contribution to ensure that Grangemouth continues to thrive in the future. We are clear that there should be a just transition for the refinery site and we remain committed to bringing forward low carbon opportunities that will sustain skilled jobs across the wider area for many years to come.”
Scottish Green MSP Gillian Mackay described the announcement as “a brutal blow for Scotland” and the local community.
She added: “All of us in the town know somebody who is employed directly or indirectly by the refinery. They’re the ones now suffering. A lot of people will be devastated, angry and extremely worried about what will happen next. I am too, I feel the same.
“This is the opposite of the just transition that is needed for the site and for Grangemouth. We have known for a long time that change is needed. Lessons have not been learned from other closures like Longannet.
“Successive Scottish and UK Governments should have taken action to provide a transition that put workers first. Grangemouth is now paying the price of that inaction.”
Scottish Conservative Central Scotland MSP Stephen Kerr said: “This is devastating news for the workforce at Grangemouth whose worst fears have been confirmed.
“My thoughts are with all those employees and their families who will be impacted by the closure next year which will be a hammer blow for the local area as well as Scotland’s wider economy.”