Grangemouth refinery jobs threatened under scale-back plans

The refinery owners say a smaller operation will allow it to retain 450 highly skilled roles at the site

Nearly 190 jobs are under threat at Grangemouth oil refinery after its owners announced plans to scale back operations at the site.

Petroineos is to launch a consultation period on Monday with up to 187 of its 637 staff at the refinery.

It said the move to "reconfigure" the plant was in response to a global decline in demand for fuels.

The company added that the smaller operation would allow it to retain 450 highly skilled roles at the site.

Under the plans, a crude distillation unit and fluidised catalytic cracker unit, which have been mothballed since the start of the Covid pandemic, will remain closed.

'Critical infrastructure'

In a statement, Petroineos said keeping the two production units in a mothballed state would "reduce future incurred costs associated with operating these two older plants".

It added that the proposals would align its "refining capacity to meet local demand in Scotland, Northern England and Northern Ireland".

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Petroineos Refining chief executive Franck Demay said: "As a national critical infrastructure it is vital we retain a productive capacity of fuels in Scotland.

"For almost a century the Grangemouth refinery has reliably produced high quality fuels for the domestic market and for export.

"We firmly believe that only by taking action now will we preserve one of Scotland's last large manufacturing sites and a significant contributor to the Scottish economy."

We're commuting less, told not to travel outside council areas, and few of us are flying anywhere, so instead of cracking crude oil at 300 degrees Celsius, it's no wonder that Grangemouth refinery is feeling the chill of the pandemic crisis.

Two of its older plants, first operating in 1949 and 1952, have been mothballed through the crisis, and are now being shut permanently.

Whereas it was processing 200,000 barrels of crude oil each day, that has been halved. This cut in staff by nearly 30% comes with a cut in capacity to 150,000 barrels.

That signals that this is not a short-term reaction to the pandemic crisis, but an acceleration of a trend that was coming anyway, adapting to lower demand for oil.

With road transport shifting to batteries, trains being electrified, more efficient aircraft, and big hopes for hydrogen fuel cells, that all has an impact on places like Grangemouth refinery.

And with global over-capacity in refining, it is tough to compete with newer, more efficient plants.

So instead of being a big exporter from Scotland, the intention is to produce enough for only Scotland, the north of England and Northern Ireland. The impact on Scotland's trade figures will be significant.

These jobs losses, then, come as a sign that public policy is working. To reduce greenhouse gas emissions, we are burning less oil. The industrial complex that has long been pivotal to the Scottish economy is sending a signal of the old oil economy winding down.

To be truly successful, public policy would also ensure a transition to jobs in green energy. But in manufacturing terms, there's not much sign of that happening.

'Vaccine within grasp'

Sandy Smart, Unite's industrial officer, said the union was "deeply concerned" by the news.

"We are acutely aware of the very challenging market conditions brought about by the Covid-19 pandemic that has resulted in a lower demand of fuels but there is now a vaccine within grasp which could significantly effect demand in the coming months," he said.

"We firmly believe the proposal is premature and that Petroineos should instead be discussing with us how to effectively use the extension in the UK government's furlough scheme to give us more time to explore every option.

"The workforce also needs assurances from the company over the medium and long-term security of the plant."

'Devastating news'

Infrastructure Secretary Michael Matheson said it was important that Grangemouth had "a sustainable future".

He said: "This announcement will be devastating news for those affected and their families at what is already an anxious time.

"The Scottish government will do everything it can to support those whose jobs are at risk of redundancy at Grangemouth and we will provide support through our Partnership Action for Continuing Employment (PACE) initiative."

Petroineos is a 50:50 joint venture between Ineos and Chinese state oil company PetroChina.

The Grangemouth refinery is one of just six crude oil refineries in the UK and the only one in Scotland.

It sources its raw materials from North Sea oil fields, imported via the Forties Pipeline System, and from elsewhere around the world.