SCOTLAND’S last oil refinery will shut by next summer, its owners have confirmed as they warned four-fifths of the workforce face losing their jobs.

Petroineos said the demand for fossil fuels was in decline and its plans to change the Grangemouth oil refinery into a fuel import hub required a fraction of the current workforce.

Frank Demay, chief executive officer of Petroineos Refining, said: “The energy transition is happening now and it is happening here.

“Demand for key fuels we produce at Grangemouth has already started to decline and, with a ban on new petrol and diesel cars due to come into force within the next decade, we foresee that the market for those fuels will shrink further.

“That reality, aligned with the cost of maintaining a refinery built half a century ago, means we are exploring ways to adapt our business.”

Out of a current workforce of 475 employees, just 75 can expect to keep their jobs over the next two years, the company confirmed.

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It will be transformed into a much scaled-down facility for the import and distribution of “finished fuels”.

First Minister John Swinney said he was “deeply disappointed” by the news. In a statement on Twitter/X, he said: “My immediate thoughts are with the workforce."

The Scottish and UK governments pledged a £100 million rescue package in the immediate aftermath of Petroineos's announcement, in a bid to save workers from the scrap heap. 

 

The cash will be split between both governments and includes money to help existing industrial sites in the region to expand and to incentivise new businesses to open, with the aim of absorbing the expected job losses from the oil refinery.

Trade unionists believe the cash will not go far enough to protect jobs and have demanded both governments work to keep the refinery open.  

Unite general secretary Sharon Graham (below) said: "This is now the last chance for this Labour Government to show whether its really on the side of workers and communities. The road to net zero cannot be paid for with workers' jobs.

“The Government must put its money where its mouth is to ensure the jobs are safeguarded. This is the only refinery left in Scotland and it must remain. There are alternative plans.

“This is yet another example of workers paying for a crisis they did not create while billionaire owners laugh all the way to the bank."

The union has said it is in talks with the Government about using the refinery as a factory to produce sustainable aviation fuel, which can reduce aeroplane emissions by up to 80%. 

Derek Thomson, Unite's Scottish secretary, said: "The sole objective for Unite remains that the jobs at the refinery and thousands more in the supply chain are protected by any means.

“Unite does not accept that the future of the refinery should have been left to the whim and avarice of shareholders.

"The complex is critical to the nation’s manufacturing base and energy security. The governments involved cannot simply hide behind the convenient smokescreen that this is a commercial decision which they couldn’t influence.”

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Roz Foyer (above), the general secretary of the Scottish Trades Union Congress, added: "Workers have, yet again, been despicably failed by politicians and governments who have been utterly inadequate in persuading Petroineos to expand the lifespan of the refinery.

“It is the job of governments to be ahead of the curve, deliver strategy and smooth the course of the transition. In all these respects both Scottish and UK governments have failed entirely."

Petroineos, a joint venture between Jim Ratcliffe's (above) energy giant Ineos and the state-owned PetroChina, said that Grangemouth is the UK’s oldest oil refinery and the facility is incapable of competing with “bigger, more modern and efficient sites in the Middle East, Asia and Africa”.

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Shareholders are said to have invested more than $1.2 billion since 2011 and incurred losses of $775m over the same period.

However, it was revealed earlier this year that the UK Government was providing a £600m loan guarantee for an Ineos petrochemical plant, Europe's largest, in Belgium. 

Demay added: “The action we are taking to create an import terminal will safeguard fuel supply for Scotland. We currently expect Grangemouth to be ready to operate as a national distribution hub for finished fuels in Q2 next year.

“Unfortunately, a terminal would require only around one-fifth of the current refinery workforce.

“Therefore we will soon enter an information and consultation process with representatives of our employees to discuss the proposals.

“We have already agreed to move from the UK statutory minimum redundancy terms to an 18-month package and if plans proceed we intend to do everything we can to reduce the impact on our people.”

Ineos said it was “business as usual” at its other operations, Ineos O&P and the Forties Pipeline System, in Grangemouth. The firm said those businesses would be “largely unaffected” by the closure of the oil refinery.