Bosses on the Petroineos plant in Grangemouth established virtually a century in the past, had informed workers that Scotland “merely will not be sufficiently big to help a fuels refinery” as a result of falling demand placing in danger jobs each throughout the plant in addition to exterior contractors.
UK and Scottish ministers have supplied no hope of intervening to avoid wasting the important thing refinery because it emerged North Sea revenues over two years are set to soar to £17.25bn.
The refinery is symbolic of Scotland’s ‘black gold’ which might be utilized by the Scottish Nationwide Get together throughout the Nineteen Seventies in making their financial case for independence from the remainder of the UK. It was argued that North Sea oil wouldn’t profit the nation to any important diploma whereas the nation remained a part of the UK.
Firm sources had mentioned that the dimensions of the losses in earlier years incurred by the corporate have been at a stage that might not be sustained by any authorities help.
“It will not be economically viable,” mentioned a supply.
The corporate that operates the refinery had at that time made complete losses of £361.64m in 2020 and 2021.
READ MORE: How Scotland’s ‘black gold’ made Grangemouth’s closing refinery iconic
It got here as the worth of its property together with the outdated refinery, tools and different property declined by £383m as of 2021 described as an ‘impairment loss’.
That got here after Petroineos lower the capability of the refinery with an estimated lack of as much as 200 jobs in 2020, because the hit to gas demand from the coronavirus pandemic hit earnings throughout the business.
However now the Herald can reveal that Petroineos Manufacturing Scotland Restricted, which owns and operates the refinery has made a report pre-tax revenue of £107,476,000, following a £50.568m loss the earlier 12 months with firm bosses admitted that the pandemic years of 2020 and 2021 had had a “pervasive impact” on the enterprise.
Its earlier revenue excessive lately was the £25.20m gained in 2017.
A February briefing by director Andrew Pizzey, has said that it had seen a “full restoration” from Covid with “all product grades again to pre-pandemic ranges”. “As a consequence, the enterprise expects to have one other good 12 months, regardless of unavoidable disruption to throughput because the refienry performs a turnaround on its hydrocracker advanced,” he mentioned.
It has been estimated that £60-80m can be wanted to re-start the hydrocracking unit at Grangemouth which some say will pave the way in which to profitability and a lifeline for the refinery and tons of of jobs.
Basically, main merchandise produced from hydrocracking are jet gas and diesel however Liquefied Petroleum Fuel (LPG) may also be produced.
Consultants say the price of repairing the Grangemouth unit which went offline in April, final 12 months, and has not been working since has performed a key half in its anticipated closure.
However Mr Pizzey mentioned that the longer-term outlook for European refining stays “difficult” and that the goal is to function the refinery “with a decrease base price construction”.
Former justice secretary now East Lothian MP and Alba Get together deputy chief Kenny MacAskill, who has been main a combat to avoid wasting the refinery mentioned: “The plant is worthwhile and a fraction of the income from North Sea oil permits it to be additional elevated.
“North Sea oil is and has been pivotal to the UK economic system. It is perverse that Scotland’s oil needs to be refined elsewhere and that Scotland’s industrial base is trashed while the UK Treasury cash within the money.”
He has been calling for a tiny fraction of the earnings from the North Sea to avoid wasting the refinery.
“If Grangemouth is allowed to close Scotland would be the solely main oil producing nation and not using a refinery,” he mentioned “It’s going to put us alongside creating nations such because the Republic of Congo and Trinidad and Tobago each of whom produce much less oil than Scotland.
READ MORE: ‘Grangemouth fraud’: Ministers hopes of being ‘world leaders’ in inexperienced gas doubtful.
“The UK has made billions from North Sea oil. They’re offering tons of of hundreds of thousands to Ineos to open a plant in Belgium and have funded international battery vegetation in England to an identical tune. Its time a modest sum was given to Grangemouth from all of the billions taken from the North Sea to shore up Scotlands economic system.”
Workers have been informed in November {that a} begin had been made on tasks that might see the Grangemouth plant transition from a refinery to probably an imported fuels depot over the following 5 years.
Refinery proprietor Petroineos – the three way partnership between Ineos Group – the petrochemicals big managed by billionaire tycoon Sir Jim Ratcliffe – and China’s state-backed PetroChina – which purchased the refinery in 2005, mentioned it’ll stay a refinery till spring 2025 and that jobs would stay secure within the quick time period.
The marketing campaign to avoid wasting the refinery has been supported by legendary Scots band The Proclaimers who’ve said in a video message (above) that it can’t be “Grangemouth No Extra”.
Their feedback are a reference to their 1987 hit ‘Letter From America’ which featured on their debut studio Album That is the Story.
The well-known lyrics of “Bathgate no extra, Linwood, no extra Methil no extra, Irvine no extra…” are a reference to the decline of Scottish business within the Eighties.
Video: The Proclaimers’ large hit Letter From America.
Based on Petroineos, it has a refining capability of 150,000 barrels per day whereas Grangemouth performs a number one position in supplying Scotland’s gas demand, and is of strategic significance to the nation’s vitality provide and regional financial growth.
It’s linked to the Forties Pipeline System (FPS) for its crude oil consumption from the North Sea and linked to Finnart Ocean Terminal for crude oil import and completed merchandise export.
In November 2020 it emerged that two manufacturing vegetation on the website, which had not been operational because the Covid lockdown the earlier March have been being mothballed. It mentioned the transfer will scale back future working prices on the website.
A couple of months earlier, the vitality agency sought a authorities mortgage bundle value tons of of hundreds of thousands of kilos amid low oil demand which was triggered by the coronavirus pandemic.
The request for the three way partnership’s mortgage adopted Ineos proprietor Sir Jim Ratcliffe’s transfer to Monaco for what have been alleged to be tax causes.
It’s understood Petroineos had been in talks for weeks with the Scottish and UK governments a couple of mortgage bundle.
Ineos mentioned on the time: “It shouldn’t come as any shock that the refinery is speaking to the federal government at a time when demand for gas has fallen considerably throughout the interval of lockdown,” earlier than including that “the request is just not from Ineos however from Petroineos, a 50-50 three way partnership between Ineos and Petrochina”.
The joint-venture believed it might have “a viable longer-term enterprise” using as much as 450 staff on the website. In 2020 there have been 637 full-time workers there.
On the time, Scotland’s infrastructure secretary Michael Matheson described the job losses as “devastating” and vowed the Scottish Authorities would do all the pieces it might to assist affected staff.
Vitality minister Gillian Martin has expressed ambitions for Grangemouth to turn out to be “world leaders in biofuels/sustainable aviation gas”.
However Grangemouth bosses have raised severe doubt over a transition to a inexperienced gas biorefinery saying the present place is “commercially suboptimal”.
A lot of the losses within the pandemic-hit years of 2020 and 2021 have been down to what’s known as an “impairment cost” which pertains to a drop within the worth of its property, which counts as a loss on monetary statements.
Some £383m dropped from its worth, within the wake of resizing its operations from November 2020. It then introduced the closure of one among its crude distillation items and its fluid catalytic cracking unit.
The lower in capability of the refinery led to an estimated lack of as much as 200 jobs in 2020, because the hit to gas demand from the coronavirus pandemic hit earnings throughout the business.
Petroineos has commenced early research work targeted on the longer term institution of a biofuels refinery at Grangemouth able to producing sustainable aviation gas.
And the Scottish Authorities hope that Grangemouth will turn out to be house to “Scotland’s solely sustainable aviation gas manufacturing plant, able to assembly future aviation calls for for many years to return”.
However Petroineos whereas noting the ambitions has indicated that there have been “fiscal and coverage obstacles”.
It centres round on the UK cap on sustainable aviation gas (SAF) produced from oils and fat feedstocks similar to used cooking oil (UCO).
And Iain Hardie, head of authorized affairs has mentioned the cap will should be addressed because it places the UK at a drawback compared to Europe.
The Petroineos government felt that it’s going to “hinder progress of delivering bio fuels at tempo”.
Andrew Bowie, the parliamentary below secretary of state on the Division for Vitality Safety and Web Zero mentioned there had been a gathering with executives at Petroineos on November 23, final 12 months to debate choices for the way forward for the positioning, long run gas safety for Scotland, and consideration of jobs on the website.
He mentioned: “Any potential selections relating to future vitality tasks on the website are a non-public business matter.”
Employees on the refinery have slated the Scottish and UK governments over their failure to collectively develop proposals which might assist shield tons of of jobs on the advanced.
A survey carried out by the Unite union involving tons of of refinery staff, together with contractors “strongly signifies” that the workforce consider there was a “collective failure” to help them following the announcement by Petroineos to being the transition.
The survey discovered that 93% agreed that the potential affect of any potential closure on the native Grangemouth economic system and that of surrounding communities can be ‘extreme’.
Some 88% mentioned that politicians weren’t doing sufficient to help and shield jobs at Grangemouth; And solely 11% expressed ‘confidence’ find a “like for like” job within the occasion of refinery operations ceasing on the Grangemouth website; Solely three % expressed confidence within the ongoing “simply transition” plans for oil and gasoline staff.
The refinery produces a spread of fuels together with petrol, diesel, kerosene, LPG and jet gas and at the moment employs round 500 and it’s understood there are tons of of contractor staff that help workers. Ineos employs one other 450 workers on the positioning at Forties Pipeline Providers and an extra 1,000 in its petrochemicals enterprise.
The 1,700-acre website is estimated to provide 70% of the gas to Scotland’s filling stations as properly Northern Eire and the north of England.
It’s the main provider of aviation gas for Scotland’s predominant airports, and a serious provider of petrol and diesel floor fuels throughout the central belt.
A Scottish Authorities spokesman mentioned: “Petroineos administration has been clear that this choice is a business one, and has been taken as a result of world components.
“The graduation of preparatory work on a brand new import infrastructure at Finnart and Grangemouth will assist futureproof the Grangemouth industrial cluster as a part of its Simply Transition to Web Zero.
“We’re dedicated to working with business to safe a sustainable future for Grangemouth that displays our ambitions for decarbonisation and a simply transition for Scotland’s industrial sector and communities, while recognising the essential position it performs in assembly gas demand in Scotland.”
A UK Authorities spokesman added: “We all know it is a regarding time for staff and their households, and are working intently with Grangemouth refinery on the long-term way forward for the positioning and the way they’re supporting workers.
“The UK Authorities will at all times again the North Sea oil and gasoline sector and inexperienced industries, similar to offshore wind and carbon seize and storage, to guard our vitality safety, entice funding and create alternatives for communities in Scotland and throughout the UK.”
