Petroineos to permanently close UK’s oldest refinery
Petroineos Refining Ltd. (PRL), a joint venture of INEOS Group’s Ineos Investments (Jersey) Ltd. (50.1%) and China National Petroleum Corp.’s PetroChina Co. Ltd. (PetroChina) subsidiary PetroChina International (London) Co. Ltd. (49.9%), has decided to permanently shutter Petroineos Manufacturing Scotland Ltd.’s 150,000-b/d Grangemouth refinery complex on the Firth of Forth in Scotland.
Pending upcoming consultation with employees and their representatives regarding the decision, PRL plans to cease all conventional crude processing operations at the Grangemouth refinery during second-quarter 2025 and transition the site into finished fuels import terminal and distribution hub, PRL and INEOS said in separate Sept. 12 statements.
PRL said the proposed refinery closure and transition plan directly results from a collision of global market pressures and the global energy transition, the combination of which has left the 1924-built refinery unable to economically compete with more modern and efficient sites in the Middle East, Asia Pacific, and Africa, as well as limited demand for key fossil-based fuels produced at the site.
During the last decade, annual costs to execute core maintenance and repairs required for maintaining the refinery’s operating license have consistently exceeded earnings, and a probable ban on new gasoline and diesel cars to take effect in the coming years will only further slash demand for conventional products, the operator said.
“The action we are taking to create an import terminal will safeguard fuel supply for Scotland,” said Frank Demay, PRL’s chief executive officer. “We currently expect Grangemouth to be ready to operate as a national distribution hub for finished fuels in [second-quarter 2025].”
Financial strain previously led to PRL rationalizing processing capacity at the site in the wake of the global pandemic outbreak (OGJ Online, Nov. 19, 2020).
In response to PRL’s confirmation of its decision to proceed with the site’s transformation plan, INEOS said its separate businesses at Grangemouth—including INEOS O&P UK’s Grangemouth petrochemical plants and INEOS FPS’s land and processing operations for its Forties pipeline system—will continue as normal, with both businesses to be “largely unaffected” by the refinery’s closure.
“INEOS Grangemouth remains committed to a long-term successful future for the site which includes the commitment to deliver net zero by 2045,” the parent company said.
Future low-carbon fuels hub?
During preparation of the site’s transition plan, PRL said it has also simultaneously been working with the UK and Scottish governments to evaluate options for Grangemouth to become a low-carbon fuels manufacturing hub.
The operator confirmed it has undertaken an initial feasibility study for the proposed Project Willow project to assess various low-carbon opportunities from technical, economic, commercial, regulatory, environment, community and skills perspectives.
Funded equally by the Scottish and UK governments, the feasibility study is being managed by Ernst & Young Global Ltd. with technical, engineering, and commercial support provided by Petroineos, INEOS, and PetroChina, PRL said.
With the initial research phase already completed—including shortlisted options for potential manufacturing of sustainable aviation fuel (SAF), low-carbon hydrogen, eFuels, and other possible low-carbon products—the project team has now entered the second phase of research that consists of a detailed assessment for viability of each shortlisted option, according to PRL.
By spring 2025, the company said it expects the project team to have identified commercially viable opportunities to develop low-carbon fuels at the former refinery that—in addition to underpinning government commitments to a net zero transition—would maximize local employment and contribute to long-term sustainable energy and fuel security in Scotland and the UK.
The Grangemouth refinery’s proposed transformation into a fuels distribution hub would result in about 400 of the site’s current 475 employees losing their jobs, PRL said.
Robert Brelsford | Downstream Editor
Robert Brelsford joined Oil & Gas Journal in October 2013 as downstream technology editor after 8 years as a crude oil price and news reporter on spot crude transactions at the US Gulf Coast, West Coast, Canadian, and Latin American markets. He holds a BA (2000) in English from Rice University and an MS (2003) in education and social policy from Northwestern University.
