By Gray Allan, Falkirk CLP
At the Scottish Labour Party Conference in Glasgow on Saturday 22nd February, Keir Starmer announced £200 million would go to saving jobs in the petrochemical industry in Grangemouth. But what can be saved and will this investment of public funds make any difference?
The petrochemical industry has been part of Grangemouth for over one hundred years. The refinery, owned by Scottish Oils, opened in 1924. Built on reclaimed land to the east of the town, it took in crude oil from the Middle East, offloaded from the tankers of the Anglo-Persian Oil Company. The port of Grangemouth had existed since the completion of the Forth & Clyde Canal in 1790. Anglo-Persian later became BP and the BP Refinery and BP Chemicals dominated the local economy. The British state was the majority shareholder in BP from the mid-fifties until privatisation by Thatcher between 1979 and 1987
Following the refinery came the downstream industries the most well-known of which was the huge ICI plant on the Earls Road known locally as the “Dyeworks” This was replaced in the nineties by Zeneca and Syngenta (also owned by the PRC), both large employers.
Upon privatisation, BP was bought by the billionaire James Ratcliffe. The chemicals business was renamed INEOS and the refining business PETROINEOS. The PETROINEOS Refinery is jointly owned by INEOS and by PetroChina, the petrochemicals business owned by the state in the Peoples Republic of China.
In 2024, Jim Ratcliffe of INEOS announced that the Grangemouth Refinery was to close in 2025, with the site to become an oil storage and transfer facility. No doubt he was influenced by the creation of a freeport in the Forth estuary, including Grangemouth. Oil imported to his storage facility and then exported would be free of all taxes and charges!
400 workers directly employed in the refinery would lose their jobs. Subcontractors on various contracts within the site would lose business. And the knock-on effects on the downstream industries would be unavoidable. The total number of jobs affected could be as high as 2,900 (Scottish Left Review 143 January 2025)
Critical component of the Scottish economy
Ratcliffe claimed the refinery was no longer profitable. This is extremely hard to believe! It accounts for 14% of the UK refining capacity and produces 65% of Scotland’s refined products, the foremost of these being fuel – petrol and diesel. A strike of refinery workers in 2008 saw petrol stations closing across Scotland and northern England as supplies dried up. The refinery is a critical component of the Scottish economy.
The trade union, Unite, dispute Ratcliffe’s claim. By his reckoning, the refinery cannot compete with more modern refineries in the Middle and Far East. It is old, although a lot of the plant has been renewed or upgraded. Grangemouth Refinery is small in comparison to others and when costs of new plant are added to its balance sheet it shows losses. It could make a profit but the simple truth is that Ratcliffe intends investing elsewhere. No prospective buyers for the refinery have come forward so far.
Of course, the closure was not news to either the Scottish and UK governments. Both the SNP and the Tories had been aware of Ratcliffe’s plan for five years but had made no preparations whatsoever. It was only in September, following the general election, that the UK and Scottish Governments commissioned Project Willow. £100m was ear-marked for long-term development of the site for low carbon hydrogen, eFuels and sustainable aviation fuels (SAF). But these will take some years to develop. Other than support in finding new jobs, there is nothing in it for the workers
So, what is Starmer’s £200m worth? As Sharon Graham of Unite said, “This is welcome news … it is essential that … this investment counts for jobs and our security” But will it? Firstly, the capital is not for direct investment in the Refinery. The cash comes from the new National Wealth Fund and its function is to encourage and underpin private investment. So far there has been no interest at all from the private sector in buying the refinery.
What happens in the meantime? The refinery is in the process of shut-down. Redundancy notices have been issued. As Unite correctly says, the plant must be kept in operation until it can be converted to produce SAF.
It is clear that there is no free-market route to this goal, even with National Wealth Fund inducements. Capital has failed. The Refinery is a critical part of the Scottish economy. No stuffing the billionaire Ratcliffe’s pockets with even more cash – it must be nationalised immediately with no compensation!
