The announcement by owners Ineos that the giant petrochemical Grangemouth plant in central Scotland is to close has been met with anger, disappointment and concern from across the UK. Over 800 employees plus sub-contractors are set to lose their jobs and the collapse of the plant is a major blow to the UK’s oil refining capability. The number of refineries in the UK has been falling for decades and there are currently just seven – Coryton in Essex was the most recent to close after its owner Petroplus, filed for bankruptcy in 2012.
The Grangemouth refinery processes around 200,000 barrels of crude oil each day, producing more than nine million litres of clean fuels every day and supplies 70% of the fuel used at Scotland’s filling stations and it also supplies fuel to Northern Ireland and the North of England. Contingency plans are being made to replace petrol and diesel supplies if the refinery closes and experts say that fuel could be sourced from elsewhere if required. The refinery and chemical plants form Ineos’ largest production centre.
In addition, the Grangemouth facility provides the steam and power which runs the Forties pipeline from the North Sea fiels which delivers a third of the UK’s oil output. Whilst the supply of steam and power has not been interrupted, if Grangemouth closes then it is not clear what happens next. A strike at Grangemouth in 2008 forced 70 North Sea oil platforms to shut down or reduce production.
Grangemouth has suffered financial difficulties, with Ineos maintaining the petrochemical plant is losing £50m a year in addition to a bitter and well publicised industrial dispute which has resulted in strike action.
The situation hasn’t been helped by a fuel overcapacity in Western Europe and been further worsened by cheap fuel imports from the United States. US refineries pay around $15 a barrel less than UK refineries for crude oil, which has helped US firms to export cheap fuel to the UK. At the moment the UK imports 47% of the diesel and 50% of the aviation fuel it needs. But for petrol there is currently a 20% oversupply, according to figures from the research group, IHS Purvin & Getz.
Talks between the owner Ineos and the trade unions are ongoing. For the latest check: http://www.bbc.co.uk/news/scotland/