Joint plan to secure industrial future of Grangemouth

Scottish and UK Governments respond to Petroineos' decision to close refinery

The Scottish and UK 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.

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.

The Scottish Government has been working with the UK 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 Scottish and UK Governments announced today on top of £80 million in joint funding from the two 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, with an employment impact of 1660 net jobs across the Falkirk Council area.
• Immediate career support for workers. Scottish and UK Government 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 three 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.

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.”

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.”

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 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 Scottish and UK 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, 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:

The Grangemouth support package announced by the Scottish and UK Governments today includes:

Joint Grangemouth support package:

The Scottish and UK Governments have today confirmed a joint £100 million support package for Grangemouth.

This includes a total of £20 million in additional investments, to support the local Grangemouth community following the closure of the refinery. It covers:

• The £10 million Scottish Government ‘Greener Grangemouth' programme, that aims to deliver projects at the heart of Grangemouth's just transition.
• £10 million from the UK Government for local energy projects, as well as new skills support from the Office for Clean Energy Jobs to help the site's workers into good clean energy jobs. 

Today's additional funding comes on top of an £80 million Falkirk and Grangemouth Growth Deal, match-funded by the two governments, to back new industries across the region. The Growth Deal will support a range of new projects, including:

• A bioeconomy plant already in the pipeline, which could use waste whisky and food in chemical production processes to reduce reliance on fossil fuels – via technology currently unavailable in the UK.
• A new £9m technology centre to support the development, manufacture and use of low carbon technologies. This will help companies substitute their products and industrial processes for greener alternatives, and will be linked to wider hydrogen and carbon capture use
  and storage projects.
• An employment hub led by one of the UK's largest operators, Forth Ports, will help develop the skilled workforce needed to support emerging energy sectors. The move will help to drive innovation and attract new investment across sectors, such as offshore wind energy, renewable energy production, storage and distribution, and tidal power. 

Immediate career support for workers:

The Scottish and UK Governments are working closely with the company, Petroineos, to provide immediate support for affected workers at Grangemouth refinery, while longer-term projects get up and running on the site.

The trade body Fuels Industry UK will ensure affected Grangemouth workers have direct access to a wide range of potential employers. The association will also work with the specialist skills provider Cogent to host job vacancies from relevant employers for the Grangemouth workforce.

Workers at the refinery will also receive tailored advice, helping them to identify new training opportunities - backed by the Scottish Government's Partnership Action for Continuing Employment framework.

The UK Government has also confirmed that Grangemouth will be among the first areas that the new Office for Clean Energy Jobs will work with to help deliver a just transition for workers.

Project Willow:

A range of proposals to deliver a viable long-term future for the Grangemouth refinery site have been shortlisted by the UK and Scottish governments, as part of a joint-funded £1.5 million feasibility study. 

The project is exploring how the region can build on its skilled workforce, local expertise and long heritage as a fuel leader in Scotland to forge a new path in clean energy production.

Following an initial research phase, the project has identified three potential industries that could be hosted on the refinery site.  These are:

• The production of low-carbon hydrogen.
• Clean eFuels synthesised from chemical components like hydrogen or carbon dioxide
• Sustainable aviation fuels which use lower carbon sources like forestry and agricultural waste, used cooking oil and carbon captured from the air to produce jet fuel.

These options will now be tested against their potential to create long-term industries in Grangemouth, support new jobs and contribute to the UK's clean energy transition. The project will engage extensively with the local community, trade unions, businesses, and industrial experts on rapidly assessing the most viable candidates for industrial production on the Grangemouth site.