Petroineos: Scotland's sole oil refinery faces potential closure by 2025 with 400 jobs at risk

The sole oil refinery in Scotland faces potential closure as soon as 2025, according to announced plans by its owners, Petroineos. The decision, which would result in the loss of at least 400 jobs, is due to significant challenges at the Grangemouth complex as a result of global market constraints, with plans to transform the site into a fuels import terminal taking 18 months.

The Grangemouth refining business is owned by Petroineos, a joint venture between Chinese state-owned PetroChina and London-based Ineos. Ineos, in addition to the refinery, employs 450 staff at Forties Pipeline Services on the site and another 1,000 in its petrochemicals business.

Petroineos said that while the timescale for the transition has not been finalised, the work is expected to span approximately 18 months, with refinery operations continuing until spring 2025. The company outlined plans for the new terminal to import petrol, diesel, aviation fuel, and kerosene into Scotland.

Petroineos said it was working closely on the project with a "range of interested parties", including the Scottish and UK governments, and said it would provide more information in due course, reported the BBC. 

Franck Demay, chief executive officer at Petroineos Refining, said it was "business-as-usual" for the time being. He said: "As the energy transition gathers pace, this is a necessary step in adapting our business to reflect the decline in demand for the type of fuels we produce.

"As a prudent operator, we must plan accordingly, but the precise timeline for implementing any change has yet to be determined. This is the start of a journey to transform our operation from one that manufactures fuel products, into a business that imports finished fuel products for onward distribution to customers."

Oil operations at Grangemouth can be traced back to 1919. The refinery, established in 1924, was one of the first crude oil refineries in the UK. Grangemouth was run by Innovene until 2005. Ineos - owned by one of Britain's richest men Jim Ratcliffe - bought Innovene in a £5bn takeover.

In 2019, plans were unveiled for the construction of a £350m energy plant at the location, forming part of a £1bn investment in the UK's oil and chemical industries.

The trade union Unite has expressed its commitment to preserve jobs at Grangemouth. Sharon Graham, the general secretary of the union, said: "This proposal clearly raises concerns for the livelihoods of our members but also poses major questions over energy supply and security going forward."

Derek Thomson, the union's Scottish secretary, added: "Every option must be on the table in order to secure the hundreds of highly skilled jobs based at the Grangemouth complex for the long-term."

According to Petroineos, the refinery plays a crucial role, contributing to 4% of Scotland's GDP and around 8% of its manufacturing base. It serves as the primary supplier of aviation fuel to Scotland's main airports and is a major provider of petrol and diesel ground fuels in the Central Belt.

The 1,700-acre site supplies 70% of the fuel to filling stations in Scotland, Northern Ireland, and the north of England. Additionally, it plays a vital role in powering the Forties oil pipeline, facilitating the transport of oil and gas from the North Sea.