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Sir Jim Ratcliffe’s energy and chemicals empire is to shut Scotland’s only oil refinery amid fears that a Labour crackdown on the North Sea will make it unviable.
Grangemouth refinery is to halt operations by 2025, putting hundreds of jobs at risk and leaving Scotland and the north of England dependent on imports for its fuel.
Petroineos, the joint venture between PetroChina and Sir Jim’s Ineos that runs the refinery, announced the plans on Wednesday, saying it would turn the complex into a fuel import terminal.
It means the refinery will stop processing crude oil in early 2025, wiping out the jobs and skills associated with the refining side of the business.
The announcement comes a month after Andrew Gardner, the chairman of Petroineos, warned that Labour’s plans for the North Sea put Grangemouth at risk.
Mr Gardner told The Telegraph that Sir Keir Starmer’s plans to ban new oil and gas projects in the North Sea risked leaving Grangemouth with enough fuel to refine.
He said: “We want to keep jobs and manufacturing here but Labour hasn’t understood that we need supplies. I need natural gas, ready, cheap and available as a feedstock.”
In an email to staff on Wednesday, Petroineos said it would “soon be unable to compete effectively with bigger, more modern and efficient refineries in the Middle East, Asia and Africa”.
The announcement of plans to end refining activities at Grangemouth comes as Labour are 20 points ahead in the polls, with an election looming next year.
Grangemouth is the only fuel refinery in Scotland and one of only six remaining in the UK. It supplies 80pc of the country’s fuel and has been a vital piece of national infrastructure for the past century.
Ashley Kelty, a director and energy analyst at Panmure Gordon investment bank, said the decision to close the facility would “impact fuel security for the UK and will potentially lead to higher costs on the forecourts as imported fuel costs will have to be passed onto consumers”.
He said: “This is another sign of a lack of governmental support for key industries – mainly through an ignorance of the energy transition and belief that renewables are able to fill the gaps.”
Douglas Lumsden, the Scottish Tories’ shadow energy secretary, said: “This is devastating news for the workers at Grangemouth and will be a hammer blow for the local and national economy if it goes ahead.
“The hostile attitude shown towards Scotland’s oil and gas industry from the SNP-Green government – as well as Keir Starmer and Labour’s betrayal of the sector – will have been a factor behind this decision.