The owners of the Grangemouth oil refinery have confirmed it will shut by the end of June next year, in a blow to Scotland’s industrial base and the site’s 500 employees.
Britain’s oldest refinery will close in the second quarter of 2025 to become a fuels import terminal and distribution hub, according to Petroineos, a joint venture between the Chinese state-owned oil firm PetroChina and Ineos, the petrochemicals empire of the British billionaire James Ratcliffe.
Petroineos is expected to meet trade union representatives to discuss its decision, which is expected to result in hundreds of job losses.
The company first raised concern among unions and politicians in November last year after claiming it had no choice but to adapt to global pressures affecting the refining market by ceasing its refinery operations.
Petroineos plans to transform Grangemouth, which already imports liquefied natural gas (LNG) from the US, into a pure fuel import and export terminal. The company said the move was necessary in order “to safeguard Scotland’s supply of fuels for the future”, and claimed only a fifth of the site’s current workforce would be needed.
There had been hopes that jobs could be saved, after Keir Starmer described Grangemouth as a “real priority” in July during his first visit to Scotland after becoming prime minister.
However, Frank Demay, the chief executive of Petroineos Refining, said on Thursday: “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.”
He added: “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.
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“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.”