Why Petroineos is blaming SNP and Labour's policies for 400 Grangemouth job losses

Petroineos has blamed Scotland’s two governments for failing to act on fears raised five years ago over the sustainability of its Grangemouth oil refinery, pointing to an impending ban on new petrol and diesel cars for the loss of 400 jobs.

The company had previously refused to appear in front of MSPs investigating a just transition for Grangemouth.

But Petroineos’s head of legal and external affairs for Scotland, Iain Hardie, appeared in front of Holyrood’s economy and fair work committee on Wednesday after his company confirmed 400 direct jobs would be lost and thousands more of indirect roles had been put at risk by the closure of Scotland’s only oil refinery.

Mr Hardie put the blame on the Scottish and UK governments after claiming Petroineos had raised concerns about the sustainability of the site five years ago, adding that action to ensure a just transition for the workers should have started in 2019 for jobs to be saved. 

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Mr Hardie set out the bleak financial backdrop of the refinery, warning Petroineos was “increasingly unable to compete with bigger, more modern and efficient sites in what  is a highly competitive and global market”.

He said: “Demand for key fuels that we produce at Grangemouth has already started to decline.”

Mr Hardie said the UK government’s commitment, supported by the Scottish Government, to ban the sale of new petrol and diesel cars from 2035 meant “the market for those fuels we produce will shrink further”.

He added: “Due to its age, size and configuration, Grangemouth requires high levels of capital expenditure each year just to maintain its licence to operate.

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“This annual outlay on essential planned maintenance and running repairs has been consistently higher than company earnings over the past decade.”

The Petroineos chief said shareholders had “invested over £1 billion in the refinery” over the past 13 years, “only to absorb cash losses worth £600m”.

He said: “Last week, the refinery lost £385,000 on average each day. We expect to lose more than £150m during the course of this year.

“We are doing everything we can to reduce the impact on our colleagues and to minimise compulsory redundancies as far as possible.”

But Mr Hardie was pressed by Labour convener of the committee, Colin Smyth, over the jobs that will be lost.

Mr Smyth said: “Where from the company’s point of view is the just transition for those 400 workers that are going to lose their jobs in a very short period of time?”

In response, Mr Hardie claimed that Scotland’s two governments had ignored the company’s warning for years.

He said: “We’ve very clearly articulated to the government in Holyrood and Westminster, for a number of years, the challenges that our business was facing. 

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“Those challenges are driven, in part, by policies set by this government around the ban on new-built petrol and diesel cars post-2030.

“In that context, I think it’s hardly surprising that there’d be an announcement as a manufacturer of petrol and diesel fuel that we would have to transition away from that at a point.”

He admitted that the closure of the refinery and ‘project willow’ that will investigate future manufacturing uses for Grangemouth “will not enable a smooth transition” for hundreds of workers.

Mr Hardie added: “If that was to have been put into effect, that piece of work would have to have happened five years ago. 

“Let’s be very clear, we came to (the) Scottish and UK governments five years ago with that proposition, but we didn’t move on.”