Dangote Fallout: Grangemouth, Scotland’s Only Crude Oil Refinery Set To Close

“Grangemouth is increasingly unable to compete with bigger, more modern and efficient sites in the Middle East, Asia and Africa” where Dangote Refinery just opened... "

The quote above sums up the reality of Grangemouth, Scotland's only Refinery reported by Reuters to have concluded plans to shut down production but remain only as a refined fuel import and distribution depot.

Arguably the first casualty in the aftermath of the emergence of the Dangote Refinery, Reuters, which quoted a statement by the company's statement, disclosed that Grangemouth, operators Petroineous, is also scheduled to reduce its workforce from 475 employees to 75.

But the decision will depend on the outcome of negotiations with Trade Union Unite, Scotland's elite worker's group.

The wind-up decision was announced November 2023 when the company revealed that it is preparating to shut down its facility, citing the second quarter of 2025 as production wind-up date.

Petroineous, a joint venture operated between PetroChina International London, PCIL, and INEOS Group, a British chemicals outfit founded by billionaire Sir Jim Ratcliffe, cited gnawing economic difficulties as the reason behind its decision to wind down.

It disclosed that it posted a succession of losses, amounting to an excess of $775mn, over its $1.2bn investment, since its inception in 2011.

Also citing its size and configuration, the refinery explained that its losses are due, in the main, to its high annual capital maintenance expenditure, particularly for its operation licence.

The loss, it emphasized, amounts to a staggering $500,000 daily loss which it expects to peak at about $200mn in 2024. The shut-down decision is however, not going down well with industry and political stakeholders both of whom are seething with disappointment.

They are also said to be mounting campaigns to extend production 'until a low-carbon alternative for its long-term future could be secured.' Trade union Unite, representing the workers, described the closure as an “act of industrial vandalism," emphasizing that “The complex is critical to the nation’s manufacturing base and energy security,” Unite Scottish secretary Derek Thomson said.

On its part, the UK government described the decision as utterly disappointing. “It is deeply disappointing that Petroineos have confirmed their previous decision to close Grangemouth oil refinery,”

UK Energy Secretary, Ed Miliband said in a statement. Meanwhile, the UK and Scottish governments on Thursday announced a joint plan, including a $130.43mn financial package, designed to secure an industrial future for Grangemouth after the refinery closes. In the main, the package is designed both as career support fund for affected workers and investments in local energy projects.

“We are announcing a package of investment to help the workforce find good, alternative jobs, invest in the community and serve a viable industrial future for the Grangemouth site,” Miliband