Scotland's only oil refinery closes

Scotland’s only oil refinery shut down last week, marking the end of operations at one of the UK’s oldest oil-processing plants.

Operator PRL announced the closure of the 150,000 barrel-per-day (bpd) Grangemouth refinery on Scotland’s Firth of Forth on April 29. The company told Reuters and other news agencies that from April 29, the company would be importing all products to meet Scotland’s demand for transport fuels.

PRL has invested £50mn ($66.4mn) in converting the facility into a modern import and distribution terminal capable of receiving refined products by sea for distribution across the country.

The move follows a 2020 announcement by PRL to rationalise capacity and fully shut down refining operations in the second quarter of this year. It did so citing the near century-old facility’s lack of competitiveness versus newer, more efficient refineries in Asia, the Middle East and Africa. Declining local demand for oil products was another factor behind the decision. 

Petroineos is a joint venture between UK petrochemicals giant INEOS and PetroChina International, a subsidiary of Chinese state-owned oil and gas company CNPC.

The closure comes weeks after the UK and Scottish governments released the findings of a £1.5mn feasibility study by Ernst & Young that evaluated low-carbon and renewable energy options for the site. Known as Project Willow, the initiative outlines nine potential business models intended to attract private investment.

Project Willow has received £25mn in support from the Scottish government and a further £200mn commitment from the UK government. Potential developments include hydrothermal upgrading for plastic waste, chemical recycling and ABE biorefining. Other proposals involve converting Scottish timber into bioethanol, producing sustainable aviation fuel (SAF) from cover crops and generating renewable diesel through hydrotreated esters and fatty acids (HEFA).

There are also plans to produce low-carbon methanol and ammonia from hydrogen as part of an offshore wind-to-hydrogen value chain.

Both the Scottish and UK governments have pledged to work with Petroineos to promote the site and secure investment interest, with the goal of bringing forward viable projects within the next 12 months.

The closure of the refinery follows a heated political dispute between trade unions and other local organisations that had accused both the UK and Scottish governments of failing to take steps to ensure that the plant remained in operation. 

Unite the Union, the UK’s largest trade union, issued a strong rebuke on April 29, warning political leaders of potential electoral consequences for failing to safeguard jobs and the community surrounding Grangemouth.

“The UK and Scottish governments have utterly failed to protect refinery jobs at Grangemouth,” said Unite general secretary Sharon Graham. “Thousands face unemployment as oil refining in Scotland ends.”

Project Willow offers a roadmap for the site’s future, but the prospective projects would not become operational for years after the site’s closure, offering little employment opportunities in the near term, Graham said.

Unite believes some projects, such as SAF production through co-processing renewable feedstocks with crude oil, could be launched immediately to save jobs.

Unite cited a PwC impact assessment showing that the refinery contributes £403.6mn annually to the economy and supports nearly 3,000 jobs. Graham also accused both governments of allowing Chinese influence – via PetroChina’s stake in PRL – to dictate Scotland’s refining future. “Workers will not forget or forgive,” she said.

Derek Thomson, head of Unite Scotland, added: “Not one job will be saved at the refinery, not one job created for years by Project Willow, and not one penny of the £200mn National Wealth Fund can be unlocked without private investment.”