Goodbye to Grangemouth

At the end​ of April, the fuel trading company Petroineos quietly announced that more than a century of oil refining at Grangemouth had ended. The manner of the refinery closure, which had been announced in November 2023, confirmed how peripheral the plant and its workforce were to the international petroleum business. Scotland remains a significant oil producer, but has no refining capacity. The UK as a whole now has just four major refineries, down from twelve in 2000. The Grangemouth site is owned by Petroineos, which is part-owned by PetroChina. In 2023, days after the closure of the refinery was announced, Angus Robertson, Scotland’s cabinet secretary for the constitution, external affairs and culture, was photographed in a Beijing boardroom meeting officials from PetroChina. It did little good. Most of the Grangemouth refinery workforce has been made redundant, though some have found jobs at the fuel import terminal that replaced their old workplace.

More oil refineries are expected to close if Britain is to reach net zero by 2050. One of Labour’s stated ‘missions’ on winning last year’s general election was to ‘make Britain a clean energy superpower’. According to its manifesto, this will secure energy independence and create ‘650,000 new high-quality jobs’. There is little sign of either so far. Figures from the International Renewable Energy Agency show that Britain is among the world’s largest importers of wind energy equipment – we are just as reliant on international supply chains and multinationals in the renewables sector as in other areas.

Grangemouth opened in the mid-1920s to refine petroleum shipped to the docks from the Anglo-Persian Oil Company’s oilfields: there was cheap flat land beside the River Forth where the refinery could be built and there were workers in the area with a background in the shale oil industry. Some became managers, engineers, technicians and electricians in the Persian Gulf. In Oil, Nationalism and British Policy in Iran: The End of Informal Empire, 1941-53 (Bloomsbury, £28.99), Jack Taylor describes their lives of relative luxury at Grangemouth’s sister refinery in Abadan. (He suggests that the Scottish manager of the oil-linked Imperial Bank of Persia may have been responsible for introducing football to Iran.) In the 1950s Anglo-Persian became British Petroleum. As well as increasing its refining capacity, Grangemouth became the site of Europe’s first petrochemicals plant, commissioned in 1951. Workers moved from Clydeside to the Forth as Glasgow’s chemical works, shipyards and railway yards closed. The town’s population boomed, with more jobs and better housing. The refinery workers I spoke to after the closure was announced talked about the opportunities that petrochemicals and refining jobs had given to generations of families.

In 2005 the refinery was sold to Ineos, the fourth largest chemicals company in the world, majority-owned by Jim Ratcliffe, and in 2011 it formed a joint venture with PetroChina. Most of the press coverage of Grangemouth has focused on Ineos, not least because Ratcliffe is outspoken about government energy policy and the defence of free enterprise, and is prominent as the co-owner of Manchester United. It might seem surprising that there hasn’t been more interest in the fact that the Chinese state is part-owner of one of Britain’s key energy facilities, but this isn’t unusual. Nationalised firms from Ireland, France, Norway and Denmark own onshore and offshore wind farms in the UK as well as nuclear power stations.

The closure at Grangemouth had little to do with net zero. Petroineos’s reluctance to invest in upgrades to the refinery was due, it said, to ‘dramatically reduced demand’. But the new fuel import terminal means the area is still tied to the petroleum economy, and the complex as a whole, which employs 2600 people, remains integral to Britain’s hydrocarbon production. In 1975, BP linked Grangemouth to its Forties field – one of the earliest to produce oil from the North Sea – with the Forties Pipeline System. The pipeline is a marvel of engineering that connects 85 oilfields and carries around a third of total North Sea production. More than a hundred miles of pipeline transport petroleum from the Forties to land at Cruden Bay, north of Aberdeen. From there, the subterranean pipeline goes to Kinneil Terminal at Grangemouth, where the oil is stabilised and the gas separated. The crude oil that used to be refined is now pumped to Hound Point in the Firth of Forth, where it is loaded onto tankers and exported. For now, the pipeline continues to operate.

Offshore production has fallen by two-thirds since its peak around the time of the millennium. What are often called the ‘majors’ have sold off their interests in the North Sea. In 2003, not long before it sold the Grangemouth refinery and petrochemicals plants to Ineos, BP agreed a deal with the Texan firm Apache for the Forties platforms. The pipeline followed in 2017. The priorities of the majors moved towards profitable ‘upstream’ activities – those associated with exploration and production in newer oilfields. By the 2010s the North Sea had become what is called a ‘mature basin’, characterised by high costs and lower profits.

Any obligation BP might have felt towards the UK economy or national interest was severely dented by the sale of government shares, which began in the late 1970s under Callaghan and accelerated under Thatcher. At the time, the sell-off didn’t seem as dramatic as the privatisations of wholly state-owned enterprises, yet, as Adam Hanieh writes in Crude Capitalism: Oil, Corporate Power and the Making of the World Market (Verso, £22), BP equity accounted for more than a third of the proceeds of privatisation between 1977 and 1990. It was a major retreat by the British government from a huge conglomerate with a global presence. In the years that followed, BP reduced its stake in British refining, petrochemicals and the North Sea. The impact was visible across the UK, from the refinery at Llandarcy in South Wales, opened by Anglo-Persian in 1922 and decommissioned in 1998, to the terminal at Sullom Voe on Shetland, sold to EnQuest in 2017.

During the general election campaign last year, the Scottish Labour leader, Anas Sarwar, promised that Labour would take decisive action to prevent job losses at Grangemouth. Shortly after the election, Keir Starmer described it as a ‘real priority’ and Ed Miliband visited the town, promising ‘to leave no stone unturned’. But Brian Leishman, who was elected as the new Labour MP for Alloa and Grangemouth in 2024, was suspended from the Parliamentary Labour Party in July this year after demanding that the government fulfil its pledge to keep manufacturing jobs in Grangemouth. Leishman cut an isolated figure when he championed the ‘Keep Grangemouth Working’ campaign launched by the refinery workers, refusing to accept the government’s conclusion that there was no alternative to mass redundancy. While politicians from both major parties have been keen in recent years to present decarbonisation as an economic opportunity, Reform has rejected this consensus, prompting the Tories to retreat: in March Kemi Badenoch claimed that net zero by 2050 meant ‘bankrupting the country’.

Any form of ‘just transition’ – managing the move to a greener economy while also protecting workers and communities such as Grangemouth – seems implausible in the context of spiralling energy costs, failed climate targets and mounting closures in older manufacturing sectors without compensatory growth in newer industries. Grangemouth is only one entry in a growing list, which includes the Port Talbot steelworks in South Wales in late 2024, the Vauxhall factory in Luton in March and the closure of Lindsey refinery in Lincolnshire this summer. In 2022, I spoke to a contracting electrician employed at Mossmorran, Scotland’s other major petrochemicals complex, which is located across the Firth of Forth in Fife. As a miner’s son who came of age after the strike, he was unable to work in the same industry as his father and grandfather. Instead, he flitted between Grangemouth, Longannet power station and Mossmorran. Another tradesman told me that he had worked intermittently as a contractor at Grangemouth since the 1980s. The impending closure of the refinery meant the end of the dependable plant ‘shutdown’ spells that created demand for maintenance contractors like him.

Around four hundred workers were made redundant at Grangemouth. Thanks to an agreement negotiated between the union and Petroineos, they were given eighteen months’ salary in compensation. Union officials were unimpressed when Starmer appeared to take credit for this achievement at the Scottish Labour Party Conference in February. But hundreds of contractors and thousands more involved in the supply chain will also be affected. A report commissioned by Scottish Enterprise estimated that 2822 jobs depended on oil refining in Grangemouth. It’s hard to estimate the overall loss of economic activity, from food vans to specialised suppliers and administrative staff.

Accounts of globalisation often adopt the premise that labour is local but capital is global. The closure of Grangemouth might seem to validate that perspective, but industrial workers, particularly in the oil sector, are often mobile. One man who had spent decades ‘on the tools’ welding talked to me last year about the personal costs of being a ‘travelling man’, who spends weeks at a time away from his family. He remembered making phone calls home on a Thursday night or Friday morning, weighing up whether the overtime on offer was worth missing a weekend with his wife and children. He suggested that the Grangemouth contractors might relocate and work at new nuclear power stations, such as Hinkley Point C on the south coast of England. I’ve heard of careers spanning the Gulf of Mexico, the Caspian Sea, the Pacific and Indian Oceans. In 2013, when there was a lockout at Grangemouth after Ineos tried (with eventual success) to freeze wages and close the pension scheme, oil companies held jobs fairs in the town offering lucrative opportunities in the Middle East. One refinery worker I spoke to told me he was thinking of taking a job in another refinery or in the mining or energy sectors in Australia or South Asia. He did not see this as an opportunity, but as a defeat. The highly qualified refinery workforce wanted and expected to be part of the energy transition. But Grangemouth has been left only with a vague prospectus, Project Willow, sponsored by the UK and Scottish governments. The plan describes opportunities for greener manufacturing in hydrogen production, biofuels and recycling, but gives no timetable for investment or job creation.

In April, the same month Grangemouth stopped refining, the British government took drastic action to save Scunthorpe steelworks. The symbolic cost of closing the UK’s last remaining blast furnaces would have been enormous. As in Grangemouth, the multinational that owned the Scunthorpe steelworks felt little responsibility for sustaining Britain’s essential infrastructure. The government takeover was necessitated by the need to keep the two blast furnaces hot, since it is difficult and expensive to start them up again once they cool. Jingye, the plant’s Chinese owners, had refused a government offer of half a billion pounds to keep the steelworks going and had turned away supplies for the furnaces; after taking control via emergency legislation, the government waited anxiously for a coking coal shipment to arrive from Australia. The British steel industry originally prospered in Central Scotland, South Wales, the North-East, South Yorkshire and the Midlands because these areas had bountiful supplies of coking coal. Now it is imported from distant lands and, despite Farage’s comments on a recent visit to Port Talbot that the mines of South Wales should be reopened, the industry is not going to return.

Why didn’t Grangemouth and Port Talbot get the same treatment as Scunthorpe? One reason was that the owner of the Port Talbot steelworks, the Indian conglomerate Tata, was more co-operative, replacing the blast furnace that closed down last September with an electric arc furnace. Yet direct employment at Port Talbot has still fallen by nearly three thousand jobs and basic steelmaking has ended. Perhaps Port Talbot would have been treated differently if it had been the last blast furnace to close. Either way, these are not deals that lead to the British people owning industry, which Miliband claimed in 2023 was one of Labour’s objectives. They are subsidies and incentives, large sums of public money accruing no equity.

Similar deals have been made at other moments of industrial crisis. Last December, when the Spanish state-owned shipbuilders Navantia took over Harland and Wolff (which owns naval shipyards in Belfast and Appledore as well as fabrication yards on Lewis and in Methil in Fife) the deal involved the Labour government renegotiating a contract for three support ships for the Royal Navy. The Lewis and Methil yards now have their fourth owners in eight years. Work has been at best intermittent. British facilities are minor players in global supply chains and the offshore wind boom has not resulted in the manufacturing contracts many anticipated.

Apache announced last November that it would begin decommissioning the Forties oil field by 2030 and end all its other North Sea operations, blaming the windfall tax imposed on oil profits after the price spiral in 2022. Production has been dropping in the North Sea basin for many years, particularly since the 2014 price crash, but the government was nevertheless attacked by industry lobbyists, the Tories, Reform, the SNP and the unions. The jobs at the new fuel import terminal in Grangemouth are threatened by dwindling demand. Private companies and foreign state-owned interests have long been prominent in sectors that the government claims are central to Britain’s security and prosperity, but no government seems prepared to do more than prop up the market.