If Grangemouth was in England, would it be saved?

Westminster has stepped in to save a British steel plant from closure on grounds of national security. But they haven’t done the same for Grangemouth. Even Labour MP for Grangemouth Brian Leishman and many other MPs for the surrounding areas have said if Scunthorpe can be saved, so can the sole Scottish oil refinery. The SNP's Westminster leader Stephen Flynn has also called for the Grangemouth refinery to be nationalised. 

Believe in Scotland founder, Gordon Macintyre-Kemp said: “If Scotland were a fully independent country, it would be in a position to step in and take over Grangemouth. Closing it will be a disaster for the Scottish economy.

“In the long term Scotland wants to move away from fossil fuels - but with a just transition. Sadly Westminster doesn’t share that commitment. Without independence, we are leaving these decisions in the hands of the government of another country with different priorities.”  

Writing in the Times, Iain McWhirter wrote: “The UK government says that it cannot allow China to close the UK’s only plant making “virgin” steel, the kind used for rails and wind turbine platforms. Precisely the same arguments apply to Grangemouth, which is Scotland’s only facility for refining our crude oil, owned jointly by PetroChina and Ineos.”

Unlike the British Steel plant at Scunthorpe, Grangemouth is not loss-making. It turned a profit of £107 million last year and will make more this year. It has some state of the art facilities such as an ethylene cracker making polymers that are important for high-end manufacturing. Until recently, Grangemouth still processed up to 60 per cent of the petrol and diesel used in Scotland. Fossil fuels are far from over - fifty per cent of the gas the UK uses still comes from the North Sea. 

But Grangemouth’s owners - PetroChina and Ineos - are closing it anyway. The firm running Grangemouth, Ineos, prefers to open a plant in the EU where it will have easy access to the world’s biggest economy. To do that it will be backed by a £600 million loan secured by the UK government.

The UK Government is reiterating that it will put £200 million towards investing in an alternative future for Grangemouth. Even if that materialises, it is a drop in the ocean - it will take billions to build a green facility to take the place of the oil refinery. 

In the meantime, the plant is still closing, Scotland will be left without oil-refining capacity, and skilled workers are being made redundant. 

• Hundreds of workers have already received redundancy notices
• Several thousand jobs in the wider supply chain are at risk 
• The UK Government is providing financial backing to help owner Ineos open a new site inside the EU.
• Scotland is still losing its only oil refinery - while England and Wales have five.
• That means oil from Scotland’s waters can’t be refined here. 
• This closure will still impact Scotland’s economy and help Unionists to make the case that Scotland is too poor to be independent

Here are five key points about the Grangemouth situation in more depth

1 - The UK has £600 million to offer in financial backing for the Antwerp refinery 

UK Chancellor Rachel Reeves has been asked why the current Labour government is continuing with a plan by the previous Conservative government to back an Ineos project in Antwerp with a £600 million loan guarantee.

She was asked why there is there £600 million for a loan guarantee for the new plant in Antwerp and not for Grangemouth and why this was not being used for leverage with Ineos in order to avoid Scottish job losses. 

The huge petrochemical plant has been described as a “carbon bomb” by campaigners. Being constructed in the Belgian city of Antwerp by Jim Ratcliffe’s company Ineos, it will bring plastic production to Europe on a scale not seen before, just as countries are trying to negotiate a binding global treaty to tackle the growing problem of plastic pollution. Ratcliffe is now also a part-owner of Manchester football club. 

2 - Grangemouth closure will impact Scotland’s economic position

The closure will have an impact on Scotland’s exports, its revenues and GDP - used by those attempting to calculate the strength of Scotland’s economy and how it would fare as an independent country. Closing Grangemouth will help the false Unionist position by helping them claim that Scotland is a less wealthy country that can’t afford to be independent and dependent on English handouts. 

There will also be a negative impact on Scotland’s energy security, making sure that Scotland will not be able to refine North Sea oil at home but will have to see it exported and bought back as end products thus reducing GDP due to higher imports. 

Gordon MacIntyre-Kemp the economist and Chief Executive of Business Group Business for Scotland said:

“Belgium produces almost zero oil but has 4 petrochemical refineries. Scotland is losing its only oil refinery because the UK Gov guaranteeing loan to Ineos £600 million to help close Grangemouth and build Belgium a 5th petrochemical plant. This is utter madness - irrefutable proof that the UK Gov is deliberately sabotaging Scotland’s economy, our energy security and our future.”

3 - Grangemouth is profitable and shouldn’t need to close

Grangemouth is Scotland's only crude oil refinery. It currently produces aviation fuel and a wide range of chemical products derived from oil for agriculture and industry. It uses oil from the North Sea but it also imports shale oil from the US and natural gas from Europe.  

Grangemouth has made losses in the past but in the year to 2024, it posted a record profit of £107 million. Company bosses admitted that the pandemic years of 2020 and 2021 had a "pervasive effect" on the business. This last year it went back to the black and will be profitable again in the current year.

It has been estimated that £60-80m would be needed to re-start the hydrocracking unit at Grangemouth which some say will pave the way to longer term profitability and a lifeline for the refinery and hundreds of jobs. Experts say the cost of repairing the Grangemouth unit which went offline in April, last year, and has not been working since has played a key part in its anticipated closure.

Ineos acquired the site in 2005 and is responsible for the entire plant, while the refinery itself is owned by Petroineos - a joint venture between Ineos and PetroChina. The owners' current plan is to convert the site into a terminal able to import petrol, diesel, aviation fuel and kerosene from the Forth into Scotland. But this import hub needs far fewer workers with just 65 of 500 jobs expected to be retained. 

Others are at risk. Approximately 2,000 people are directly employed at the site - 500 at the refinery, 450 on the Forties pipeline from the North Sea and a further 1,000 in the Ineos petrochemicals business. If the refinery closes, there future is uncertain. 

4 - England and Wales have five profitable refineries

Grangemouth’s closure will leave Scotland without an oil refinery - while England has four and Wales one. 

The Pembroke oil refinery in Wales is one of the biggest in Europe and is highly profitable. Owner Valero Energy returned over $6.6 billion to stockholders through dividends and stock buybacks in 2023. 

ExxonMobil has invested heavily in its refinery at Fawley in Hampshire, the biggest fuel producer in the UK, and it is part of a highly profitable operation. The other oil refineries - at Stanlow, Lindsey and Humber- have faced challenges but they are not loss-making. 

They are benefiting from large investments from their owners to reduce their carbon footprint and keep them competitive. (But several other refineries, both in the UK and Europe, have closed down or become import hubs in the last two decades.)  

5 - The UK’s £200 million is too little too late for a just transition

An alternative future for the plant as a hub for sustainable aviation fuel may be possible. 

The biofuels market doesn't yet exist at scale. But it soon will - the demand is there and will increase as new rules over aviation pollution come into force. Scotland could move into a strong position to supply this emerging market.

Rise, a coalition group made up of the UK’s leading airlines, airports, engineers and producers, including Edinburgh, Glasgow and Aberdeen Airport, said Scotland could become a world-leader in SAF production which could boost the economy by £1.8bn by 2030 and create 60,000 jobs across the UK.

The £200m investment that PM Keir Starmer first announced at the Labour Scottish conference is nowhere near enough to change Grangemouth into a production hub for Sustainable Aviation Fuels (SAF) or a production site for green hydrogen. 

There is also a lack of clarity about just what it is the UK government wants to invest in. The plan seems to be to use the money to attract businesses to set up in the area of the site but no word about what they will do there. 

However, for a just transition to be a reality, a joined up investment strategy would have to have been in place before the skilled workers were made redundant.

Conclusion

The unnecessary closure of Grangemouth will impact Scotland’s economy and its energy security. There is no reason why Scotland cannot have a profitable oil refinery and energy security.

If Scotland was an independent country there is no doubt it would step in to save Grangemouth the way Westminster has stepped up to save Scunthorpe. 

The limits of devolution are revealed once again. Holyrood has no power to affect this momentous change to the Scottish economy.

Support the work of Believe in Scotland and our independence campaign – Join us! Only a non-party-political independence campaign can move independence support to the levels we need to win our independence.