Grangemouth oil refinery jobs 'could be saved by green projects'

Petroineos has said it is exploring the feasibility of converting part of its doomed oil refinery at Grangemouth into a biofuels business and politicians have received assurances plans for a carbon capture project at the site would not be affected by the closure of the facility.

Energy Secretary Neil Gray held a meeting with politicians on Friday afternoon, in which he said the Scottish Government was looking at ways the refinery could be kept in operation for longer, the Sunday National understands.

Three politicians who attended the online call – which was said to have included 30 people including MPs, MSPs and officials – said it was floated that Petroineos had told the Scottish Government it was looking at making biofuels at the site.

READ MORE: First Minister speaks out as Scotland's only oil refinery announces closure

It emerged last week that the Grangemouth oil refinery – which has operated under various guises for nearly 100 years – would cease operations in 2025, shedding around 400 jobs in the process.

The company said it would convert the facility into a fuel import depot – which would see refined fossil fuels from abroad sent to the site for distribution throughout the UK.

A biofuel future? 

One politician said they “would expect” the company to explore the feasibility of producing biofuels and that there were also hopes that hydrogen projects could be introduced.

But there are concerns biofuels – a form of green energy which uses heavily processed natural materials like wood as a fuel source for heating and electricity – are “relatively new” and that demand for them could be low.

Meanwhile, oil and gas prices have escalated in the wake of the war in Ukraine and in the Middle East. 

Costs of biofuel are rising despite increased production, according to a 2022 forecast from the International Energy Agency, which revised down its growth predictions for the sector last year.

One politician who attended the call said: “This is new stuff. Will people buy it?”

Another politician on the call expressed concern about whether jobs in the oil refinery could be transferred seamlessly into new green technology.

They said: “It would have been ideal if we could transfer jobs into the new green sector but clearly that’s not going to happen with the timescales. What is achievable now is what we need to think about.”

Gray was also said to have been urged to put public money behind the union that represents Petroineos workers in Grangemouth, to help draw up plans to save the site.

A source who attended the meeting said they were concerned Gray (below) did not “grasp” the potential impact a closure would have, given the significance of the site.

It is Scotland’s only oil refinery and one of only six in the UK.

The refinery processes oil from the North Sea and as of October this year, Petroineos benefits from generous tax breaks as the site is located in the Forth Green Freeport.

Unite, the union representing oil refinery workers at Grangemouth, said the Scottish and UK governments must explore “every possible policy tool available” to preserve jobs.

Derek Thomson, Unite Scottish Secretary, said: "Unite welcomes all efforts to support the hundreds of highly skilled jobs directly linked to the Petroineos oil refinery at Grangemouth.

“We are clear that these efforts must involve all interested parties working in partnership on behalf of the workforce.

“This process must involve exploring every possible policy tool available to the Scottish and UK governments. 

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“Unite continues to engage with Petroineos on its transition proposals and we encourage all stakeholders including both governments to collectively work with us to assess all commercial options including the continuation of the refinery beyond 2025."

Gray was described by the politicians in attendance to have been “open” to exploring how the Scottish Government could intervene in the interests of saving jobs – but it is thought no options at this stage are concrete.

One source said: “It’s fairly early days”.

Changing to an import depot could also pose environmental concerns.

The UK Government has previously defended the continued exploitation of North Sea fossil fuels on the basis they are cleaner than imports from abroad.

There had been speculation the site could close for years and the petrochemicals plant at Grangemouth was saved from closure in 2013 after Edinburgh and London brokered a deal between the union and management.

The Herald reported last week that the company which operates the refinery – a joint venture between Petrochina and Ineos – had suffered “unsustainable” losses of £361.64 million between 2020 and 2021.

It is a major contributor to the Scottish economy, with top economist Mairi Spowage of the Fraser of Allander Institute estimating that it was responsible for between 0.25% to 0.3% of the country’s total economy output.

Petroineos was approached for comment.