The 150,000 b/d Grangemouth refinery in Scotland is to close and will be converted into a fuel import terminal under plans announced today by operator Petroineos.
Petroineos — a joint venture between PetroChina and UK-based Ineos — said it will start preparatory work "soon", which it expects to take 18 months to complete. Until then, it's business as usual, the firm said.
"We currently anticipate continuing refinery operations until spring 2025," said Franck Demay, chief executive of Petroineos' refining operations. "This is a necessary step in adapting our business to reflect the decline in demand for the type of fuels we produce," he said, adding that the precise timeline for the conversion has yet to be determined.
As part of the plans, Petroineos said it is also evaluating the feasibility of building a bio-refinery on the Grangemouth site. According to Ineos, the closure of the refinery will not have a significant impact on petrochemical operations at Grangemouth or on the North Sea's Forties Pipeline System (FPS), which is directly linked to the site.
The refinery is a major supplier of road fuels across the densely populated central belt of Scotland and is also the primary supplier of jet fuel to Scotland's main airports. The Unite trade union said its closure poses questions over the UK's energy security. But Petroineos has defended the plan, saying it will enable it to import finished oil products for onward distribution across the UK. The firm said the preparatory work will make it possible to import gasoline, diesel and jet fuel into Scotland via the Firth of Forth. It said it is also working on plans to convert its existing export terminal at Finnart on the Firth of Clyde, which is linked to Grangemouth by pipeline, into a diesel import facility.
Market participants said it is hard to predict the impact of the refinery's closure on oil product markets, given the timeline for implementing the change. For the crude market, it will have some impact on the UK's demand for light sweet grades. Grangemouth imported around 108,000 b/d of predominantly light sweet crude via the Finnart terminal in the last 12 months, according to Vortexa data. That included 44,000 b/d of US grade WTI and nearly 30,000 b/d of Norwegian grades Statfjord, Gullfaks and Troll.
Grangemouth also takes North Sea grade Forties directly via the FPS, which saves on shipping costs, although its Forties intake fell to just 23,000 b/d over the last 12 months, or roughly one 700,000 bl cargo a month. The refinery used to take as much as 80,000 b/d of Forties back in 2016.
