Yesterday energy firm PetroIneos announced the closure of the Grangemouth oil refinery and a transition to operations as an imports centre within the next 18 months. Grangemouth is Scotland’s only oil refinery, producing over 70% of all of Scotland’s petrol and diesel. The closure is a worrying development, leaving Scotland without a centre to refine its own oil and making us more vulnerable to dependency on foreign imports for fuel.
The refinery, which is near Falkirk, is one of six major facilities of its kind in the UK, with the other five being in England and a refinery has been located on that site for nearly 100 years. In 2011, Ineos, run by Brexiteer Jim Ratcliffe, entered a deal with Chinese oil company PetroChina to form PetroIneos – the current managers of the refinery. Currently, around 70% of Scotland’s petrol and diesel is produced in Grangemouth and it also supplies fuel to Northern Ireland and North East England. Yesterday, PetroIneos announced that the refinery would be closed in 18 months, due to concerns about meeting profits, transitions to electric vehicles, the UK’s high manufacturing costs and ‘over-capacity’ of oil production in Western Europe. Notably, their other refinery project in Lavera in the South of France, continues to operate, with Ineos acquiring 100% of shares in the site this July. The current proposals mean that after the refinery is closed, Grangemouth would continue to operate as an import and export terminal only – while remaining part of the new Forth Green Freeport.
The most direct impact of the refinery’s closure is the potential loss of around 500 jobs at the plant itself. The local economy will therefore take a major hit as a result – Grangemouth and Falkirk, which have several areas scoring highly on the Scottish Index of Multiple Deprivation (SIMD) will bear the brunt of the impact.
But the issue runs deeper than this. The situation begs the question – why is it that Scotland has such a wealth of energy resources but does not have control over their extraction, nor how the profits from said resources are spent, nor even it seems the ability to process them? In future, any oil extracted in Scottish waters will have to be transported to England or further abroad to be refined, then transported back to Scotland to be used here. In contrast, Norway, an independent nation with a similar population to Scotland and extensive oil reserves, has two refineries.
In 2021, the UK imported £12.4 billion refined oil, the largest proportion of which was from Russia. While Russian oil imports have decreased following the invasion of Ukraine, the UK still relies on other countries such as the United Arab Emirates, the Netherlands and Saudi Arabia for refined oil imports. Closing one of the six remaining refineries only increases that dependency.
Not only is this additional transportation even worse in terms of environmental sustainability, it also makes Scotland more reliant on other countries to handle vital energy assets at a time when that power is absolutely essential. There will be no meaningful reduction in global carbon emissions due to the closure of this plant as demand for fuel will not be affected. In their response to the closure, GMB General Secretary Garry Smith said: ‘The intention to transition from domestic production to a fuel import terminal poses serious questions about the UK’s energy security’. Yet the UK Government has been happy to hand out hundreds of new oil licences (without plans for a transition to renewables) while it stands by as vital centres to process them are closed. An oil rich nation without its own oil refinery is madness.
The closure has come under fire from representatives from across the political spectrum, including surprisingly, both the Scottish Greens and Scottish Conservatives. Even Mid Scotland Tory MSP Murdo Fraser described the closure as ‘a huge blow’, calling for an urgent UK ministerial statement, while Scottish Greens MSP Gillian Mackay, who grew up in Grangemouth, described it as ‘the opposite of a just transition’. The decision is unpopular with almost everyone but unfortunately there is not much that the Scottish Government is able to do. PetroIneos is run as a private partnership between Ineos, a British company with Monaco-based ownership and PetroChina, a Chinese oil and gas company. An independent Scotland, with greater control over its own energy industry, may have been able to organise a just transition which minimises the loss of jobs and detrimental impacts to the economy caused by closures such as these.
The closure of Scotland’s only oil refinery does not hasten our transition to renewables nor make us more sustainable. It only threatens jobs, both the local and national economy, decreases our energy security and massively increases our dependence on the rest of the UK to manage our own resources and to provide us with a supply of fuel. Grangemouth has sadly become an example of how control of its own energy assets and natural resources has been wrested away from Scotland.
