By Grangemouth, Scotland’s only oil refinery, is set to shut down by the summer of 2025.
This could result in the loss of approximately 400 jobs.
The refinery, owned by Petroineos, will be transformed into a fuel import and distribution terminal.
The move is driven by global competition and declining fuel demand.
Petroineos stated that the decision will safeguard Scotland’s future fuel supply but has raised concerns about the local economy and job market.
The refinery has been a vital part of Scotland’s industrial landscape since its establishment in 1924 by BP.
Over the years, it expanded into petrochemical production becoming a key supplier of aviation fuel for Scotland’s major airports, and petrol and diesel fuels for the Central Belt.
However, changes in the global energy market and the refinery’s inability to compete with more modern sites in Asia, Africa, and the Middle East have led to its impending closure.
Grangemouth closure reason: Declining fuel demand
Petroineos cited the decreasing demand for the key fuels produced at Grangemouth as a major factor in closing the refinery.
The rise of electric vehicles and renewable energy sources has reduced demand for petrol and diesel, with a complete ban on new petrol/diesel vehicles expected within the next decade.
Frank Demay, CEO of Petroineos, said:
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.
The company also pointed out that maintaining the refinery, which is nearly a century old, had become economically unviable due to the high capital expenditure required each year.
According to Petroineos, the site was losing around $500,000 a day, with losses expected to reach $200 million by the end of 2024.
The decision to transform the refinery into an import terminal is seen as a way to adapt to these challenges while ensuring a continuous supply of fuel for Scotland.
Impact on jobs due to Grangemouth closure
The closure will lead to significant job losses, with 400 employees expected to be made redundant.
Currently, Grangemouth employs 475 workers, but Petroineos has confirmed that the new import terminal will only require a workforce of fewer than 100 people.
The redundancies are expected to take place gradually, with up to 280 job losses occurring within the first three months after the closure.
Local workers and unions have expressed outrage over the decision. Chris Hamilton, a plant operator and union official who has worked at Grangemouth for 11 years, described the announcement as a “kick in the teeth.” He stated,
This site dominates the local economy and jobs market. Hearing the closure is confirmed today isn’t any easier.
Workers have voiced frustration that alternatives for the site, such as green energy initiatives, have not been fully explored before the closure was announced.
Union leaders have also criticized the response from both the Scottish and UK governments.
Derek Thompson, the Scottish secretary of trade union Unite, called the closure a “terrible indictment” of the government’s failure to secure a future for the site.
“What we’re effectively going to see is 400 workers put on the scrapheap,” Thompson said, warning of the devastating consequences for the local economy.
Govt response and plans for the Grangemouth site
First Minister John Swinney expressed disappointment over the closure, stating that the Scottish government is working closely with the UK government to deliver an investment plan for the region.
The governments have unveiled a joint three-point plan to support the future of the Grangemouth site, including a £100 million investment in local energy projects.
A feasibility study, called Project Willow, will examine potential long-term industries that could be established at the refinery site to help ease the transition.
However, despite these efforts, a source close to Petroineos stated that such plans are unlikely to materialize in time to prevent the job losses expected next year, BBC reported.
Workers fear that they will be left without immediate employment opportunities, with many calling for more urgent action from the government to protect jobs.
The refinery’s closure also raises concerns about the future of Scotland’s fuel supply.
While Petroineos has assured that the new terminal will be able to import key fuels such as petrol, diesel, aviation fuel, and kerosene, it remains to be seen whether the transition will be smooth.
The terminal is expected to begin operations by mid-2025, importing fuel via the Firth of Forth.
Grangemouth closure: loss for Scotland’s industry
The closure of Grangemouth marks the end of an era for Scotland’s industrial base.
As one of the UK’s six refineries and Scotland’s only one, its shutdown will have wide-reaching consequences for the local economy and workforce.
While the transition to a fuel import terminal may ensure the country’s fuel supply, it does little to address the immediate economic and social impacts on the region.
The loss of 400 jobs is a significant blow, and both governments face increasing pressure to provide viable alternatives and support for the affected workers and communities.
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