Scotland’s solely oil refinery at Grangemouth is to cease operations subsequent 12 months. The Petroineos facility will in all probability be remodeled to a terminal for importing accomplished fuel akin to petrol and diesel.
Petroineos said Grangemouth is increasingly more unable to compete with bigger, additional stylish and setting pleasant web sites inside the Middle East, Asia and Africa. The closure is anticipated to consequence inside the lack of spherical 400 of the 475 jobs on the refinery, which has been working since 1924.
‘Demand for key fuels we produce at Grangemouth has already started to say no and, with a ban on new petrol and diesel autos ensuing from come into stress all through the next decade, we foresee that {the marketplace} for these fuels will shrink further,’ a Petroineos spokesperson outlined. ‘That actuality, aligned with the value of sustaining a refinery constructed half a century prior to now, means we’re exploring strategies to adapt our enterprise.’
Petroineos, a 3 means partnership between Ineos and PetroChina, well-known that repairs costs had required larger than $1.2 billion (£908 million) since 2011, resulting in losses of over $775 million for the same interval. Grangemouth is one in every of six refinery facilities inside the UK and produces petrol, diesel, kerosene, jet fuel and fuel oil, along with a small amount of petrochemical feedstock naphtha.
‘The operational reliability of Grangemouth Refinery has been poor recently,’ in response to the spokesperson. The refinery has a functionality of 150,000 barrels per day, nevertheless ‘utilisation has been lowering 12 months by 12 months since 2019, from 81% in 2011 to 55% in 2018’. Spherical half of the refinery’s crude oil enter comes from the North Sea, with the remaining imported.
The UK imported practically 42 million tonnes of crude oil in 2023, largely from Norway (35%) and the US (32%), as they produce comparable composition crude oil to the UK. Plenty of million tonnes originated in Nigeria, Libya and Canada, in response to Fuels Enterprise UK.
‘The concept is that the import terminal will meet the current present of the refinery, which is spherical 80% of Scotland’s fuel present,’ says Jamie Baker, director of exterior relations at Fuels Enterprise UK. ‘Normally, the UK refineries produce additional petrol than we would like and don’t produce ample jet fuel and diesel fuel, so we steadiness it out by the use of imports.’ In complete, about 56 million tonnes of oil merchandise have been delivered to the UK, with jet fuel significantly up in 2023.
Asia and the Middle East have invested in very big refineries that serve the native and export markets
‘We’ve seen a variety of imports from US refineries recently, says Baker. ‘Fairly a bit comes from Europe. The Netherlands and Belgium have quite a few refining functionality relative to their measurement.’
Individually on the Grangemouth sophisticated, Ineos operates a petrochemical plant and the Forties Pipeline System. These firms will in all probability be unaffected by the refinery closure, Ineos acknowledged. The Ineos Olefins and Polymers plant has a functionality of spherical 1.4 million tonnes/12 months of ethylene, ethanol, polyethylene and polypropylene, and employs spherical 1000 people. The pipeline has spherical 500 employees, transporting 300,000 barrels of crude oil per day from 85 North Sea fields.
With info of the refinery’s closure, Petroineos says it is working with UK and Scottish governments on Grangemouth’s potential as a low-carbon fuels manufacturing hub. A feasibility analysis – Problem Willow – is assessing selections akin to sustainable aviation fuel, low-carbon hydrogen and related merchandise, and e-fuels, with commercially viable options to be acknowledged by spring 2025. Unions representing the refinery staff have criticised every governments for performing too slowly, saying that any jobs from Problem Willow are probably a variety of years away.
The UK and Scottish governments have pledged an additional £20 million funding and occupation help bundle deal for the neighborhood and staff, on excessive of £80 million in current joint funding for the broader Falkirk and Grangemouth space.
If refining functionality falls in Europe, we’d lose a neighborhood present of aggressive feedstocks, which could impression the European chemical commerce
Valeria Sterpos, from administration consultancy Bain & Agency, expects to see ‘declining demand for the traditional [refinery] merchandise and elevated demand of greener merchandise akin to renewable fuels that require completely totally different present chains and adaptation of belongings,’ however moreover elevated market volatility.
She says refiners are going by way of selections. One chance is to adapt current vegetation and progressively produce new merchandise. A second different is to proceed to produce typical merchandise. In a shrinking market, this will likely favour basically probably the most aggressive refineries. Even so, they may need to further improve effectivity and in the reduction of their carbon footprint.
‘In case you don’t have aggressive belongings, and in addition you don’t have funding to remodel these belongings, you probably can consider your footprint and shut down or develop right into a logistics hub,’ says Sterpos.
Before now, European refineries would possibly export to Asia, nevertheless ‘now Asia, and likewise the Middle East, have invested in very big refineries that serve the native market however moreover the export market,’ Sterpos supplies. The chemical commerce in Europe could even actually really feel an impression by the use of feedstocks akin to naphtha, although this may not be instrumental in funding selections for refineries.
‘Feedstock for the chemical commerce is a minor portion of refinery manufacturing – 80% is fuels or totally different merchandise,’ says Sterpos. ‘If refining functionality falls in Europe, we’d lose a neighborhood present of aggressive feedstocks, which is perhaps vulnerable to affect the European chemical commerce.’
Nevertheless, ‘if producing nations inside the Middle East and southeast Asia proceed to produce naphtha from big, setting pleasant refineries, then the impression will not be that enormous,’ she concludes.