The Petroineos joint venture's 150,000 b/d Grangemouth refinery in Scotland has stopped processing crude and the company will now import transport fuels to meet demand, it said today.
The move ends more than 70 years of refining at Grangemouth, and around 400 workers will lose their jobs. The closure removes 13pc of the UK's refining capacity, which will probably increase the country's reliance on imported refined products.
Petroineos — a joint venture between PetroChina and UK-based Ineos — said in November 2023 it would close the refinery in spring this year, later deciding to repurpose the site to an import and distribution terminal. It said today it has invested £50mn ($67mn) in this.
Petroineos rejected a call from UK labour union Unite for the refinery to be converted into a a sustainable aviation fuel (SAF) plant. London has said it would provide £200mn for investment in clean energy at the Grangemouth site, which it hoped would unlock private sector funds.
Unite today said "for all the talk, nothing has been done", and said the closure was because the UK and Scottish governments "have effectively allowed China to shutdown Scotland's capacity to refine fuel".
Slow death
UK refinery output dropped to a 17-month low in March, reflecting Grangemouth's gradual drop in run rates ahead of processing its final barrel.
The effect on national fuel balances has already been felt, with UK gasoil imports at an almost six-year high of 1.484mn t in April, and net gasoline exports the lowest on record at 65,000t, according to the country's latest submission to the Joint Organisations Data Initiative (Jodi).
The Grangemouth closure is one of three major refinery shutdowns planned this year in Europe. In Germany, Shell began to close its 147,000 b/d Wesseling refinery in March, and BP plans to remove a third of the crude distillation capacity at its 257,000 b/d Gelsenkirchen site this year.
This removal of 400,000 b/d of capacity represents around 3pc of Europe's total.
This year's plant closures are widely expected to exacerbate a supply squeeze of middle distillates on the continent, while failing to address a growing gasoline supply overhang exacerbated by the ramp-up of production from Nigeria's 650,000 b/d Dangote refinery.
Further unplanned European refinery closures are anticipated by market participants as product margins slide from post-pandemic highs and elevated overheads squeeze operating profits.
