Petroineos to shutter units at Grangemouth refinery

Petroineos Refining Ltd., a joint venture of Ineos AG-formed Ineos Investments (Jersey) Ltd. and China National Petroleum Corp.’s PetroChina Co. Ltd. (PetroChina) subsidiary PetroChina International London Co. Ltd., is planning to permanently shutter two processing units as part of a reconfiguration strategy at Petroineos Manufacturing Scotland Ltd.’s 210,00-b/d Grangemouth integrated refinery complex on the Firth of Forth in Scotland.

Designed to adapt the plant to reflect the global decline in demand for fuels and align its capacity to meet local demand in Scotland, Northern England, and Northern Ireland, the proposed plan aims to mothball the refinery’s crude distillation unit 1 (CDU-1) as well as its FCC unit, both of which have been offline throughout the coronavirus (COVID-19) pandemic, Petroineos said.

The move, which also aims to protect at least 450 jobs of the refinery’s more than 630 full-time employees, comes as the global refining industry faces huge challenges, including increasing electrification of the transport fleet and more fuel-efficient vehicles that have led to reduced demand for fuel, a trend that has only accelerated this year by the COVID-19 health crisis, according to the company.

Permanent mothballing of the CDU-1 and FCC units—will reduce future incurred costs associated with operating the two older plants to ensure a viable, longer-term business, Petroineos said.

While shuttering of one of two CDUs at the Grangemouth refinery—Scotland’s only—will halve the country’s crude processing capacity, Petroineos’s proposed plan seeks primarily to ensure the site’s ongoing sustainability, according to Franck Demay, chief executive officer of Petroineos Refining.

“As a national critical infrastructure, it is vital we retain a productive capacity of fuels in Scotland,” said Demay.

“For almost a century, the Grangemouth refinery has reliably produced high-quality fuels for the domestic market and for export. We firmly believe that only by taking action now will we preserve one of Scotland’s last large manufacturing sites and a significant contributor to the Scottish economy,” Demay added.

On Nov. 16, Petroineos was scheduled to enter a statutory consultation period with its Grangemouth workforce and their representatives to discuss the proposed refinery reconfiguration plan.