Hundreds of jobs are at risk as plans are made to shut down Scotland's only oil refinery, part-owned by the Ineos Group, the petrochemicals giant controlled by billionaire tycoon Sir Jim Ratcliffe.
Bosses at the Petroineos plant in Grangemouth established almost a century ago, have told staff that Scotland "simply won't be big enough to support a fuels refinery" due to falling demand.
READ MORE: Grangemouth: Ministers reject saving oil refinery as North Sea revenues soar
Staff have been told that a start has been made on projects that will see the Petroineos plant transition from a refinery to potentially an imported fuels depot up to the second quarter of 2025.
Why is the Grangemouth refinery important?
It is home to Scotland’s only crude oil refinery through a joint venture between Sir Jim Ratcliffe's Ineos Group and China’s state-backed PetroChina.
It is said to have the capacity to produce around 7 million tonnes of fuels and 1.4 million tonnes of petrochemicals every year.
It produces a range of fuels including petrol, diesel, kerosene, LPG and jet fuel and currently employs around 500.
It is the primary supplier of aviation fuel for Scotland’s main airports, and a major supplier of petrol and diesel ground fuels across the central belt.
It is connected to the Forties Pipeline System (FPS) for its crude oil intake from the North Sea and connected to Finnart Ocean Terminal for crude oil import and finished products export.
How did it develop?
The history of Grangemouth dates back to long before oil was discovered in the North Sea in the mid-20th century when industrial pioneers led by a Glasgow-born chemist named James Young worked out how to extract mineral oil from the rich coal and shale deposits in Scotland.
The first oil works in the world were opened in Bathgate in 1851 producing oil from shale or coal.
The network of small refineries that sprang up in the area shipped some of their output from the docks at Grangemouth.
In 1919, BP, then known as Anglo-Persian Oil, acquired Scottish Oils, a group that included Young’s Paraffin Light and Mineral Oil, and drew on its skills to help build its refinery at Grangemouth in the early 1920s.
BP was persuaded to locate at Grangemouth rather than in north-east England due to its flat ground to the east, its transport links and most importantly, the rich vein of labour skilled in shale oil refining.
By 1924 the refinery was in operation. It maintained a throughput of 360,000 tons per year until the outbreak of war in 1939 when imports of oil dwindled and forced it to close.
It reopened in 1946 to a world even more hungry for refined oil products. This demand made it essential for economic reasons that the crude oil was utilised completely, and this led to the growth of the petrochemical industry.
The following decades saw BP build and expand the adjacent petrochemical plant, which benefited from the development of North Sea oil in the 1970s.
Oil and gas from dozens of North Sea fields comes ashore next door through the Forties pipeline, which is still operated by BP.
The plant converts byproducts from oil and gas into industrially valuable chemicals like ethylene and propylene, as well as polyethylene for plastic bottles and food wrap and polypropylene for pipes and carpeting.
During BP’s reign in Grangemouth was a classic company town. To house employees at subsidized rents, it built rows of semi-attached gray stucco houses that are placed right up to the edges of the plant.
In 2017, Sir Jim Ratcliffe's Ineos announced the acquisition of the Forties Pipeline System from BP. That acquisition reunited North Sea and Grangemouth assets under Ineos ownership.
It is reputedly the UK's second-oldest, supplying refined products to customers in Scotland, northern England and Northern Ireland.
What of its safety record?
One of the refinery's biggest accidents happened in March 22, 1987 when the hydrocracker unit exploded. The resulting fire burned for most of the day. One worker was killed Just 9 days earlier on March 13, another incident occurred involving the refinery flare line, the resulting fireball killed two workers.
In 2002, BP the previous owners of the plant, were fined £1m for breaching safety laws during a series of incidents which occurred in 2000.
In 2021 Ineos Chemicals was fined £400,000 after a leak from a cracked pipe created a huge explosive gas cloud putting workers and others nearby at potential risk of death from a blast wave.
Ineos Chemicals admitted that its safety inspections failed to detect the 10-inch long corroded pipe at its Grangemouth plant, which allowed ethylene gas to escape.
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