Scotland’s only oil refinery, Grangemouth, has officially ceased crude oil processing after a century of operation. The closure marks the end of an era for the refinery, which has struggled to compete with modern facilities in Asia, Africa, and the Middle East.
Grangemouth’s Century-Long Legacy Comes to an End
In September 2024, Petroineos, the owner of the Grangemouth refinery, announced that the facility would stop processing crude oil in the first quarter of 2025. The decision was part of a larger shift as the refinery faced stiff competition from newer, more efficient refineries in other parts of the world. Now, the transition is complete, with the refinery no longer processing crude oil.
Iain Hardie, regional head of legal and external affairs at Petroineos, confirmed the shutdown on Tuesday, stating, “From today, we will be importing all the products necessary to meet Scotland’s demand for transport fuels.”
This transition is part of a broader plan to repurpose the site into a finished fuels import terminal and distribution hub, a move that’s expected to be fully operational by the second quarter of 2025. However, this shift has not come without consequences.
The Struggle to Compete
Opened by BP’s predecessor in 1924, Grangemouth refinery has a long history of serving the Scottish energy market. Over the decades, the facility expanded its operations into petrochemicals and became a key part of Scotland’s energy infrastructure. At its peak, the refinery had the capacity to process 150,000 barrels of crude oil per day.
However, in recent years, Grangemouth has struggled to keep up with the competition from massive, state-of-the-art refineries in Asia, Africa, and the Middle East. These newer refineries benefit from lower production costs, technological advancements, and economies of scale, making them more efficient and cost-effective than older facilities like Grangemouth.
The closure of the refinery has led to the loss of 430 jobs, a blow to the local workforce. Still, about 70 employees will remain at the site to oversee the transition to a fuel import terminal.
The Economic and Environmental Impact
The closure of the Grangemouth refinery is not just a loss of jobs but also highlights broader challenges facing the UK’s manufacturing sector. Sir Jim Ratcliffe, the billionaire owner of Ineos (which co-owns Petroineos), has spoken out about the pressures placed on British manufacturers by carbon taxes and high energy costs.
Ratcliffe, whose company also operates in the energy sector, urged the UK government to address the carbon fiscal burden that energy-intensive industries face. He argued that while carbon taxes are intended to reduce emissions, they are, in practice, harming the UK’s manufacturing sector and increasing the country’s dependence on imports.
He added, “A tax designed to reduce emissions is, in practice, killing manufacturing, making the UK more dependent on imports and increasing emissions.”
Petroineos, like many energy companies, faces steep costs for its carbon obligations under the UK Emissions Trading System. Ineos claims that these obligations are costing the company $20.1 million (15 million British pounds), further adding to the strain on the UK’s energy sector.
A Shifting Energy Landscape
The closure of Grangemouth marks a significant moment in Scotland’s energy history. While the country remains a major player in the energy market, particularly in renewable energy, the loss of the refinery raises questions about the future of domestic energy production in the UK. The shift toward importing finished fuels instead of refining crude oil locally is a sign of the changing dynamics in the global energy market.
While the Grangemouth site will continue to serve as a hub for fuel imports, it’s clear that the UK’s energy sector is undergoing significant changes. The focus is shifting toward more sustainable energy solutions, but the transition from traditional fossil fuel infrastructure to cleaner alternatives presents challenges for industries and workers alike.
