Grangemouth operator Petroineos has confirmed Scotland’s only oil refinery will cease operations in the second quarter of 2025, leading to a net loss of 400 jobs.
Shortly after the Petroineos announcement, the UK and Scottish governments announced £20 million in new funding for a joint investment plan at Grangemouth.
Meanwhile, the Unite union criticised the move as an “act of industrial vandalism” and vowed to “explore all avenues” to protect jobs at Grangemouth.
Grangemouth oil refinery
In November last year, Petroineos announced plans to cease production at Grangemouth and transition the site into a fuels import terminal.
The plans attracted criticism from unions and Scotland’s Just Transition Commission, amid concerns about the impact on workers.
Petroineos – a joint venture between PetroChina and Ineos – blamed market pressures and the energy transition for the decision.
The firm said Grangemouth is the UK’s oldest refinery and currently faces “significant challenges” due to global market pressures and the energy transition.
Petroineos said the Scottish facility is “increasingly unable to compete” with larger and more modern sites in the Middle East, Asia and Africa.
© Supplied by PetroineosThe company said it has invested more than $1.2 billion (£919m) since 2011 to maintain operations at the refinery, resulting in losses of more than $775m (£594m).
After it ceases production, Petroineos said Grangemouth will transition to fuel import and distribution hub.
As import terminals require “significantly fewer people to operate than a refinery”, Petroineos said it will being a consultation process with the 475 employees on the transformation plan.
The company expects the changes to lead to a “net reduction of approximately 400 roles over the next two years”.
On top of the 400 direct roles, Petroineos representatives told a Holyrood committee that typical industry modelling forecasts seven jobs lost in the supply chain for every job lost in refining, potentially leading to “thousands” of job losses in the Falkirk area.
Energy transition ‘happening now’
Petroineos Refining chief executive Frank Demay said the UK energy transition is “happening now and it is happening here” at Grangemouth.
“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,” Demay said.
© PA“That reality, aligned with the cost of maintaining a refinery built half a century ago, means we are exploring ways to adapt our business.”
Demay said Petroineos has agreed to offer an 18-month redundancy package to workers and the company intends to do “everything we can to reduce the impact on our people”.
“We will of course be seeking to minimise compulsory redundancies as far as possible,” he said.
First Minister ‘deeply disappointed’
Scotland’s First Minister John Swinney said he was “deeply disappointed” that Petroineos had confirmed its decision to cease refining at Grangemouth in 2025.
“My immediate thoughts are with the workforce,” Swinney said.
© Image: Kenny Elrick/DC Thomson“We will continue to engage with the [UK government] to deliver an investment plan, which includes a £100m package and immediate career support for workers, to secure an industrial future for the site.”
Energy secretary Ed Miliband said the UK government will “stand with the workforce in these difficult times”.
“That is why we are announcing a package of investment today,” he said.
“This will help the workforce find good, alternative jobs, invest in the community and seek a viable industrial future for the Grangemouth site, with potential for future support from the National Wealth Fund.
“Workers and their families should be in no doubt this is a government that stands with workers, trade unions, and businesses to fight for jobs and investment in Scotland.
£100m support package for Grangemouth
In a joint statement, the UK and Scottish governments announced a £100m support package for the Grangemouth, which included some previously announced funding.
This includes £20m in joint funding announced today on top of £80m provided as part of the Falkirk and Grangemouth Growth Deal in 2021.
The UK government said the funding will “support the community and it workers” by investing local energy projects.
The government said it estimates the funding will lead to over £628m in economic benefits for the region and create 1,660 jobs across the Falkirk Council area.
© Supplied by Arcola EnergyScottish acting cabinet secretary for net zero and energy Gillian Martin said the Scottish government “will support every worker affected by this decision”.
“The Scottish Government has consistently made clear our preference was for refining to continue as long as possible, and we have continued to press the shareholders for a positive decision until the 11th hour,” Martin said.
“This significant package of support combines immediate help for affected workers and a long-term contribution to ensure that Grangemouth continues to thrive in the future.
“We are clear that there should be a just transition for the refinery site and we remain committed to bringing forward low carbon opportunities that will sustain skilled jobs across the wider area for many years to come.”
The government said Secretary Miliband will co-chair an immediate virtual meeting of the Grangemouth Future Industry Board today alongside Martin, Secretary of State for Scotland Ian Murray an representatives from Falkirk Council and trade unions.
Grangemouth future
The announcement comes the day after Scotland’s acting net zero secretary Gillian Martin highlighted the “massive opportunity” for Grangemouth after the end of refining.
The UK and Scottish governments have jointly committed £1.6m in funding for Project Willow, exploring the potential for low-carbon fuel production at Grangemouth.
Petroineos, INEOS and PetroChina are also providing engineering and commercial support for the project, which is being led by EY.
Petroineos said the initial research phase of Project Willow has shortlisted options including sustainable aviation fuel (SAF) production, low-carbon hydrogen and eFuels.
Support for UK SAF production was included as a key measure in Labour’s first King’s Speech earlier this year.
Shortly after his inauguration in July, Prime Minister Sir Keir Starmer travelled to Scotland to meet with Swinney, with talks focusing on the future of Grangemouth.
Scottish Labour has called for the UK government to make Grangemouth “home to the industries of the future”, a view echoed by trade union Unite.
An area of the wider Grangemouth site falls within the Forth Green Freeport (FGF), and Petroineos told a Holyrood committee earlier this year it is exploring SAF and biorefinery production at the site.
Unions vow action
Meanwhile, the Unite union vowed to “explore all avenues” to preserve jobs at Grangemouth.
Unite general secretary Sharon Graham called the Petroineos decision “an act of industrial vandalism”.
“This dedicated workforce has been let down by PetroIneos and by the politicians in Westminster and Holyrood who have failed to guarantee production until alternative jobs are in place,” Graham said.
© DC Thomson & Co. Ltd“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 “
Unite Scottish secretary Derek Thomson said the “sole objective” for Unite is to protect jobs at the Grangemouth refinery and “thousands more” in the supply chain “by any means”.
“Unite does not accept that the future of the refinery should have been left to the whim and avarice of shareholders,” Thomson said.
“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.”
‘Devastating’ for Grangemouth workers
In response to the Petroineos announcement, Scottish Conservative Central Scotland MSP Stephen Kerr said it is “devastating news” for the Grangemouth workforce.
Kerr said the closure next year will be a “hammer blow” for the local area as well as Scotland’s wider economy.
“Given the threat of closure has been a real possibility for some time, it is unacceptable that workers have failed to hear any sort of support plans from the SNP and Labour governments during this period of great uncertainty,” Kerr said.
“Ministers must now act with urgency as to how they will help those workers who are about to lose their jobs in the wake of this massive loss to Scotland’s industrial base.
“If they fail to do so, it will sum up their hostile attitude towards the future of the oil and gas sector across Scotland.”
Meanwhile, the Scottish Greens said news of the closure is a “brutal blow for Scotland”.
Scottish Greens Central Scotland MSP Gillian Mackay said the community of Grangemouth is “paying the price” for the “inaction” of success governments on planning for a just transition.
“We should have been learning lessons from site closures like Longannet, which happened just down the road from Grangemouth,” Mackay said.
“There should have been something much better for Grangemouth, we should have had a just transition plan before I was even in [parliament].
“We’re seeing Grangemouth suffering from the inaction of successive governments to actually do that planning.”
Mackay added that if taxpayer funding is allocated to support Grangemouth, INEOS owner Jim Ratcliffe should have to contribute as well.
“If Jim Ratcliffe has enough money to go and spend it at Manchester United, then he surely has enough money to support his workers here too,” Mackay said.
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