Grangemouth bosses confirm oil refinery closure - but cannot say when

Bosses at Grangemouth oil refinery have confirmed they will be closing - but cannot say when.

Last month Petroineos, the owners of the refinery, announced it is ending the operation of Scotland’s last remaining oil refinery and transforming the site into an oil import terminal.

Hundreds of jobs are now thought to be at risk, as the energy giant expects only a fifth of this 500 members of staff to be kept on. Another 50 jobs could be retained to work on decommissioning and demolition, which could take up to three years.

Iain Hardie, head of external affairs at Petroineos, was quizzed by Holyrood’s economy committee on Wednesday and said no closure date had yet been set.

However, it has been reported it will cease refining operations in spring 2025.

Mr Hardie said: “We have not made a decision as and when we will be closing the Grangemouth refinery. There is a recognition that the refinery will close.

“We wouldn’t be putting in place these measures if we had line of sight to the refinery operating for the next 20 years. But that’s simply not the case – no one in the refining industry, in the UK Government, or the Scottish Government, reasonably believes that.”

Claire Baker, convener of the economy committee, said: “From the outside, this doesn’t look like a just transition for Grangemouth.”

Mr Hardie said the site, which is one of the oldest refineries in Europe, is “highly inefficient” due to its age, and cannot continue to operate at a loss.

Similarly demand domestically for fuel is falling because of an increase in the use of electric and hybrid vehicles, Mr Hardie said, and although there has been an “artificial spike” in demand caused by the Russian invasion of Ukraine, the underlying issues at the refinery have not changed.

Over the past decade the refinery has incurred losses of more than $1 billion (£800 million).

However, Mr Hardie said customers the refinery works with would still be served once the site turns into an import hub. A formal consultation on job losses has not yet started, but talks with unions are ongoing.

Mr Hardie said the company would be offering employees “an upgrade to the redundancy terms” and an “above-inflation pay rise” to incentivise them to stay until the refinery ceases operations in 18 months time.

He said: “We need to give them as much financial security as we can at this time, in order that we can continue to operate as a refinery for as long as we need to.”

Economy secretary Neil Gray was also questioned by the Holyrood committee. He said the Government was working with Grangemouth’s owners to keep job losses to a minimum, adding reports 400 jobs would be lost was “an assumption, not a definite”.

Speaking afterwards Douglas Lumsden, the Scottish Conservatives’ spokesman for net zero, energy and transport, said: “Neil Gray was trying to reassure the committee there was no final decision and that 400 job losses were an assumption, rather than a conclusion.

“But representatives from Petroineos had just given exactly the opposite impression in their evidence. The SNP threw the oil and gas industry under the bus, and then dithered about how to safeguard jobs – even though Neil Gray admits they had known ‘for a long time that the future of the refinery was at risk’.

“Thousands of people worried about their jobs deserve better than this vague flannel.”