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The UK and Scottish governments unveiled a £100mn package to “secure Grangemouth’s industrial future” after Petroineos said it would end operations at Scotland’s sole oil refinery with a net loss of 400 jobs and a threat to thousands more.
Both governments described the decision to change the refinery between April and June next year into an fuel-import terminal and distribution hub as “disappointing”, pledging £10mn each in new money to deliver energy transition projects on the site and support skills training.
This comes on top of their joint funding of £80mn for the previously announced Falkirk and Grangemouth Growth Deal, which is supporting plans for a bioeconomy plant, a £9mn low-carbon technology centre and an employment hub to help reskill workers for green jobs.
“It is deeply disappointing that Petroineos have confirmed their previous decision to close Grangemouth oil refinery,” said Ed Miliband, UK energy secretary. “We will stand with the workforce in these difficult times.”
The UK government committed to exploring options to develop the site into a green energy hub, with the potential for support from the National Wealth Fund.
It said a jointly funded £1.5mn study has identified three “credible” options for new industries to build a long-term future for Grangemouth, including low-carbon hydrogen, clean synthetic e-fuels and sustainable aviation fuels. Petroineos said it would continue to work with the government analysing these options.
In response to the refinery closure, Miliband is co-chairing a meeting of the Grangemouth Future Industry Board with Gillian Martin, Scotland’s cabinet secretary for net zero and energy, and Ian Murray, secretary of state for Scotland, to discuss next steps with local industry, government and union representatives.
Unite, a union, described the closure as “industrial vandalism”, which had caused widespread fury among its members at the facility and threatened thousands of jobs in related supply chain companies.
“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,” said Sharon Graham, general secretary of Unite.
Petroineos, a joint venture between Ineos and PetroChina, said the UK’s oldest refinery had faced market pressures and was unable to compete with more modern sites elsewhere. Shareholders have invested $1.2bn since 2011 and incurred losses of £775mn, it added.
As the import terminal requires significantly fewer workers, the company said it would enter a consultation process with the refinery’s 475 employees, with an expected net reduction of about 400 roles over the next two years.
Ineos said it was “business as usual” for the distribution of fuel products.