Industrial Destruction – the Betrayal of the Grangemouth Oil Refinery

On the 29th of April 2025 it was announced that Scotland’s only fuel refinery at Grangemouth near Falkirk had essentially ceased operation with the end of processing crude oil. Scotland’s oil refining industry is over with the closure of the 100-year old refinery, now meaning all fuel products will just be imported at the site as a terminal.

Despite promises from both Westminster and Holyrood to protect the plant’s jobs and industrial capacity, all jobs contracted to the plant are to be cut by summer this year.

What led to this?

The Grangemouth Oil Refinery was established in 1924, making it the oldest refinery in the country with immense amounts of land and manpower available to its disposal.

During the 1950s, it expanded significantly into a petrochemical centre and further developed its operations from then on, undoubtedly becoming of clear economic value to both local and national prosperity leading to output peaking in 1999.

However in November 2023 Petroineos – a joint venture by Sir Jim Ratcliffe’s INEOS and China’s state-owned PetroChina – announced the Grangemouth Oil Refinery was set to close within 18 months. By February 2025, over 400 jobs were effectively cut and now it has ceased entirely.

The reasons given? Apparently, the plant was at a loss of £383,000 per day with 2024 at a record £150m loss due to global market pressure from the Middle East, Africa and Asia, where there exists more efficient refineries.

Let’s analyse these claims more carefully.

Producing 150,000 to 210,000 barrels of oil per day, it became a vital centre for the oil and gas industry with electricity pylons and underground pipelines extending across the country all the way up to the North East of Scotland.

It was the primary supplier of Scotland’s main airports and a major supplier of petrol and diesel fuels across the Central Belt of Scotland, providing for 70% of stations in Scotland as well as in Northern Ireland and the north of England.

It employed around 500 direct workers at the refinery, though 2,000+ people worked indirectly as contracted employees associated with the site and its local supply chain along with the apprenticeships to boast, making up a total workforce of 2,822. These workers, on average, have salaries 45% above the local average in Falkirk.

All in all, it could make up 4% of Scotland’s GDP, 8% of our national manufacturing industry and accounted for 14% of the UK’s refining capacity and supplied nearly two-thirds of refined oil products.

And actually between 2014 and 2022, without exception to 2020, Grangemouth made over £49m in net profit. 2020 was the outlier likely due to marking down asset value and the failure to invest. Furthermore, it’s possible that Grangemouth made over £100m in pre-tax profits in 2024, so the numbers might not be adding up here.

Even weirder, the UK Government granted over £600m to support an INEOS project to establish a new site in Antwerp, Belgium and the company has new investments worth billions for US oil and gas assets.
Yet there’s not enough money to be made or spent with and for Grangemouth apparently?

The blame lies solely at the UK
Government and higher management for this failure, surely. With an increasing windfall tax levied by the Labour Government along with the additional ban on all fracking by the Tories before them, it’s no wonder then that it has suffered this fate.

It’s recently been announced that the British Government is making new efforts to not only support the steel industry, but begin a nationalisation process of British Steel – a major strategic asset in England.

Yet, they haven’t even extended anything of the sorts for Grangemouth, an equally strategic energy and regional economic asset.

This has left the majority of the direct workforce redundant already. Much talk has been discussed but little action has been done to stop it.

Clearly, the pushback has been strong to the closure. Major Scottish trade unions have joined forces with individuals and parties in the Keep Grangemouth Working campaign in efforts to either save the refinery or at least save the jobs.

At the forefront of this campaign has been the Alba Party, having consistently fought tooth-and-nail since 2023 to save the refinery and the jobs vital to keep it in operation.

Just a month before his untimely passing Alba leader and oil economist Alex Salmond at the Hope Over Fear rally at George Square in Glasgow proclaimed: “Our biggest industrial facility is threatened with closure, and they stand by and do nothing!”

He also criticised the Labour Government for extending the windfall tax, which as he and others pointed out, will cause 100,000 jobs (half in the oil and gas sector) to disappear and hinder North Sea licensing to support industries like Grangemouth.

Kenny MacAskill, in particular, has given a voice to the shop stewards and workers of Grangemouth, arguing it in the House of Commons as an MP, at the grassroots and now as Alba’s leader. He has said that, while a transition is necessary, it must be a just one in order to protect the economic security of Grangemouth and allow for Scotland to sustain itself on its own renewables and energy alternatives through the use of oil and gas. Though as we’ll discuss later, that won’t be the case now.

In response to these calls, both the UK and Scottish Governments have approved a report, now called Project Willow, to begin the transition from oil and gas to a green form of operation.

The UK Government has pledged £200m and the Scottish Government £25m to support Project Willow. However, it seems to me and others that this project is severely lacking in its proposals.

It is a lengthy report (that cost around £1.5m to even write up) that has only been able to find only nine potential successful alternatives, none of which involve oil and gas. Instead they propose the site can maybe be used for renewables like hydrogen and wind, or be transformed into a recycling or biorefinery site to process waste into new products.

There are several problems here. First of all, Grangemouth is not suitable for hydrogen or wind usage – it would be too expensive and overextended to be sustainable due to distance and location. Secondly, only a couple thousand people work in the wind sector, especially for onshore wind, making it well below targets set by the Scottish Government, so the necessary manpower to support such a transition on one site would be lacking due to this jobs deficit in the industry, and likely be too long. Thirdly, it still leaves most of the North Sea’s oil and gas untapped, leaving behind so much energy potential for usage through more environmentally friendly measures such as carbon capture and storage.

Speaking of which, despite proposals from the Alba Party and many others in the Keep Grangemouth Working campaign, the UK Government has not signalled support for the Acorn Project; a carbon capture and storage scheme, which would catch CO2 emissions from industrial sources or power plants, preventing them from entering the atmosphere and contributing to climate change, and ensuring a sustainable oil and gas supply.

The UK Government has also not given any commitment for Grangemouth to become a source of renewable jet fuel, which could retain the skilled jobs while allowing the site to be the primary supplier of Scotland’s main airports. Petroineos also rejected Unite’s calls to transform Grangemouth into a SAF (Sustainable Aviation Fuel) site.

In fairness to it, the Scottish Government has pledged to support training programmes to help redundant workers back into work and coordinate low carbon high-skilled sectors. However, again it’s likely going to be too late given the time needed to do this while Grangemouth is in the midst of closing and both the UK Government and Petroineos have seemingly disregarded any good alternatives (that £200m of which by the UK Government will not be going to the workers or to the actual Grangemouth site to keep it going until the end of the transition).

The most glaring problem with Project Willow, however, is time. The timetable set by the UK and Scottish Governments have the transition delivered in full by the 2040s and the benefits of the jobs and skills transition won’t begin to kick in until 2027 – this is simply way too long. Grangemouth doesn’t need action by x or y amount of time, it needs it now. In a world of intense competition in international trade, Scotland needs an industrial strategy to harness its resources here and now in order to compete. Words on a paper can’t save the refinery or its jobs, only by action.

We saw such action before for Grangemouth. In 2008 and 2013, the refinery was threatened with closure as a result of industrial action which would cause massive economic disruption to the country. In both instances, the Scottish Government began negotiations between INEOS and Unite to ensure a balanced solution could be found. As a result, in only two days the strikes were called off in the 2008 ordeal, and in 2013, the Scottish Government convinced Unite to return to work after First Minister Alex Salmond affirmed to them that the refinery would not be closed if the controversial pension plan put forward by INEOS, which started the strikes, would go ahead in return for enormous company investment into the refinery.

This was what was done in times of crisis at Grangemouth by the Scottish institutions. Not inaction or endless papers, but action and negotiation.

The politicians of today, sadly, are not made of such stuff anymore.

Labour MSPs voted down a motion in the Scottish Parliament urging the UK Government to intervene to save Grangemouth as was done with Scunthorpe. 61 SNP and 30 Conservative MSPS with the support of the Liberal Democrats and Greens (surprisingly) voted in favour of it meanwhile the majority of the Scottish Labour MSPs (17 in total) voted against it and 5 of them weren’t able to vote. This after ages of Labour criticising the Scottish Government and other parties on the refinery’s closure.

Only one Scottish Labour member, Brian Leishman MP for Grangemouth and Alloa, has stood up against his party, pushing for the UK Government to do what is necessary to save the Grangemouth Oil Refinery. We ought to salute him for his efforts, a man with principle and courage in a sea of London’s puppets.

This is not a ‘just transition’, the workers of Grangemouth have been hung out to dry and Scotland has lost a vital economic and energy centre.

So what will the consequences be? Well it’s too early to say with absolute certainty, but one can take a few guesses.

Scotland and Northern England historically were the industrial heartland of this island during much of the 19th and 20th centuries. In particular, the Central Belt of Scotland was a melting pot for the steel, iron, textiles, coal and shipbuilding industries. However, this changed in the 1960s through to the 1990s, where a series of de-industrialisation, starting under Labour and then accelerated catastrophically under Thatcher’s Conservative Party. It would effectively end with Ravenscraig, a major steelworks, when it was closed down in 1992 under John Major’s premiership.

What followed was a total loss of that link that communities felt to each other, their spirits were gone and their pride torn to shreds. In the north of England and Scotland, deprivation, unemployment, drugs, lower life expectancy and crime would become common.

Without trying to fearmonger, I believe a similar wave will happen at a local scale near the Grangemouth Oil Refinery. The workers there undoubtedly feel a sense of pride in their high-skilled trade and to have it shut down and replaced will surely have a ripple effect to the wider area.

Grangemouth as a town, not as a refinery, already suffers greatly. Local unemployment at 9.1%, deprivation at 23.7% and school attendance at 69.8% – all either above or below the average level in Scottish in the worst ways. So to have a refinery where, despite its problems, the people of Grangemouth and others enjoying the supply chain through local businesses connected to the refinery. If it is suddenly shut down it will not have a positive effect in the slightest. Just like that, nearly 3,000 jobs and the refinery, valued at £403.6m, will be gone forever.

On the wider front, Grangemouth’s closure means Scotland will become dependent on imported energy to fuel itself. Scotland is in the top 25 oil-producing nations and It will become the only major one without a refining capacity.

A developed nation like Scotland now has something in common with poor and developing countries like the Congo, Trinidad and Tobago, and Nigeria, in that they are all oil-producing nations without a refining capacity. Meanwhile, Singapore, a country that doesn’t produce a single drop of natural oil, has its own refineries to utilise.

This means now that Scotland must depend solely on foreign trade for oil and gas. In the lead up to Grangemouth’s closure, the UK has seen its balance of trade fall dramatically to the point where oil imports are vastly higher than exports, meaning we are now in a fuel trade deficit. Scots will now be charged a premium price at the stations for fuel extracted from our waters and sold back to us, meaning greater emissions being ejected into the atmosphere to transport it all the way from longer distance refineries to be brought here.

In short, Scotland’s energy self-sufficiency has begun to die.

What then should be done? Well, what I personally believe is that the UK Government should take the same action as is being done with Scunthorpe and nationalise the Grangemouth refinery with the Scottish Government leading the transition for an eventual green way forward without endangering the jobs and security of the site through a sufficient carbon capture and storage scheme.

In the end, these are just my own perspectives on this major issue today. I don’t know all the answers nor all the questions, however, marks a dark time in modern Scottish history and I would be failing as a citizen of Scotland to call what I see.

By Lewis Atkinson

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