Issued by: Department for Energy Security and Net Zero & Scotland Office

The UK and Scottish governments respond to Petroineos’ decision to close Grangemouth oil refinery.

- UK and Scottish governments respond to Petroineos’ decision to close the refinery with investment plan for workers

- Three-point plan for a just transition for the workforce and community, including new funding for £100m package

- Commitment from UK Government to develop Project Willow options, with potential for future support from the National Wealth Fund

The UK and Scottish governments have announced a joint investment plan for Grangemouth following Petroineos’ decision to decommission its oil refinery and pledged to work together for an industrial future for the site (12 September).

The company has confirmed it will cease refining oil at the site during the second quarter of 2025 onwards due to global market pressures and competition from bigger, more modern and efficient sites in the Middle East, Asia and Africa. This follows years of loss-making, with the company stating that it has lost more than $775 million since 2011, despite having invested more than $1.2 billion to maintain the refinery’s safe operation.

The UK Government has been working with the Scottish Government to deliver an investment plan that will help secure Grangemouth’s industrial future and protect its skilled workforce.

This includes:

- £100 million package: This includes £20 million in joint funding from the UK and Scottish governments announced today on top of £80 million in joint funding from the 2 governments for the Falkirk and Grangemouth Growth Deal. This funding will support the community and its workers, investing in local energy projects to create new opportunities for growth in the region. Over the next 30 years, it is estimated that the Falkirk & Grangemouth Growth Deal will deliver over £628 million in economic benefits and create 1,660 jobs across the Falkirk Council area

- Immediate career support for workers: UK and Scottish governments to provide tailored support that will help affected workers in finding new employment

- Investment in the site’s long-term future: The £1.5 million joint-funded Project Willow study has identified a shortlist of 3 credible options to begin building a new long-term industry at the refinery site, including low carbon hydrogen, clean eFuels and sustainable aviation fuels

It comes as the UK Government confirmed today it stands ready to engage on how the National Wealth Fund could back projects that have the potential to yield a viable long-term future for the site. Ministers have confirmed that both governments will put local businesses, workers, and trade unions at the heart of decision-making on determining the region’s industrial future.

UK Government Energy Secretary Ed Miliband said:

"It is deeply disappointing that Petroineos have confirmed their previous decision to close Grangemouth oil refinery.

"We will stand with the workforce in these difficult times, that is why 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, with potential for future support from the National Wealth Fund.

"Unlike in the past, the government is working in lockstep with the Scottish Government across every front. Workers and their families should be in no doubt this is a government that stands with workers, trade unions, and businesses to fight for jobs and investment in Scotland."

Scottish Government Cabinet Secretary for Net Zero and Energy Gillian Martin said:

"My immediate thoughts are with the workforce. This is a very challenging time for them and their families, and we will support every worker affected by this decision.

"We are working very closely with the UK Government and together we have communicated our disappointment to Petroineos today.

"The Scottish Government has consistently made clear our preference was for refining to continue as long as possible, and we have continued to press the shareholders for a positive decision until the 11th hour.

"This significant package of support combines immediate help for affected workers and a long-term contribution to ensure that Grangemouth continues to thrive in the future. We are clear that there should be a just transition for the refinery site and we remain committed to bringing forward low carbon opportunities that will sustain skilled jobs across the wider area for many years to come."

Secretary of State for Scotland Ian Murray said:

"I understand this is a worrying time for the workers at the refinery and the UK Government is working closely with the Scottish Government and Petroineos to ensure they are being supported.

"Both governments have invested in Project Willow to examine how Grangemouth remains an energy hub in Scotland. The enhanced £100 million Falkirk and Grangemouth Growth Deal announced today will help ensure the long-term future of the site - a key part of our journey to clean energy by 2030.

"We remain committed to working together looking at how we can help the area build on its skilled workforce and local expertise to boost economic growth."

The Energy Secretary Ed Miliband and Scottish Cabinet Secretary for Net Zero and Energy Gillian Martin have taken joint action to urgently engage with Petroineos, industry experts, and trade unions in exploring all possible solutions to secure a viable industrial site for the future, in the event of a decision from the company to close the refinery.

Ministers continue to urge the company to keep refining open for as long as possible, emphasising the company’s responsibility to its employees and the community. As the company has made clear that there is no viable commercial future for the refinery business, the UK and Scottish governments have today unveiled a package to help the workforce, invest in the area and secure a viable industrial future for the Grangemouth site, as one of Scotland’s key industrial heartlands.

The company’s decision to convert to an import terminal means that their fuel supply will now be maintained by importing refined products directly, rather than importing crude oil to refine on site. This will form part of the UK’s diverse and resilient fuel market, covering both imported fuel and refined oil production. Since 2013, the UK has been a net importer of refined products, with imports accounting for 51% of UK demand for all petroleum products in 2023.

In response to today’s news from the company, the Energy Secretary Ed Miliband will co-chair an immediate virtual meeting of the Grangemouth Future Industry Board (https://www.gov.scot/groups/grangemouth-future-industry-board), with Cabinet Secretary for Net Zero and Energy Gillian Martin, and the UK Government Secretary of State for Scotland Ian Murray. Ministers will discuss next steps with local industry leaders, Falkirk Council, trade bodies and unions – ahead of an in-person meeting of the Grangemouth Future Industry Board later in Autumn.

Further information is available here: (https://www.gov.uk/government/news/uk-and-scottish-governments-announce-joint-plan-to-secure-industrial-future-of-grangemouth?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=c71a389c-d846-4826-b4a5-0bbd1b71daa4&utm_content=immediately)

Tags

More Like This

Progress for investment in Grangemouth's future

Action to boost jobs and investment for clean energy in Scotland

Government reignites industrial heartlands 10 days out from the International Investment Summit

More Scottish energy projects unlocked to deliver clean power

Government puts workers at the heart of new and improved Port Talbot deal

Aberdeen to host Great British Energy HQ in UK-wide clean energy drive

New Great British Energy partnership launched to turbocharge energy independence

Prime Minister and Welsh First Minister: Together we will “supercharge” mission to make Britain a clean energy superpower