Meeting of the Parliament

Meeting date: Thursday, November 23, 2023

Official Report 1054KB pdf

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Urgent Question

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Petroineos (Closure of Refinery)

To ask the Scottish Government what steps it is taking to support those affected by the decision of Petroineos to close its refinery.

I thank Michelle Thomson for giving me this opportunity to update Parliament.

First, I recognise that this is a very worrying time for the workers at Grangemouth, and I assure them of my personal commitment and the Government’s commitment to work to ensure that they receive the appropriate support. Having spoken to refinery senior managers along with the First Minister this morning, it is my understanding that this is not a decision, at this point, to close the refinery but a decision to start the necessary preparations to have the potential to transition Grangemouth to an import terminal.

We will continue to engage proactively with all stakeholders as the situation develops. The management was clear that the decision is a commercial one, taken due to global factors, not a decision that has been taken because of anything that the Scottish Government or the United Kingdom Government has done. Indeed, the management is supportive of our 2045 targets. I also met representatives of Unite the union and the Scottish Trades Union Congress this morning to express our full support for staff at Grangemouth and to ensure that we are doing all that we can to secure a sustainable future for the refinery.

We have a shared commitment to insisting that a just transition for workers is at the heart of any future decision. I will continue to engage with the unions, and I restate that my door is always open for constructive dialogue to support the future of workers and the site more generally.

Finally, I have written to the Secretary of State for Energy Security and Net Zero today to outline my concerns regarding the announcement, and I have asked for an urgent meeting to discuss how we can work together to support those affected by the decision. We will be seeking assurances around fuel security.

I will allow a wee bit of extra time for this question, but a number of members are seeking to ask supplementaries, and I therefore ask for the questions and answers to be brief if possible.

I quite agree with the cabinet secretary that our immediate thoughts must go to those affected by the decision, regardless of the outcome, who are now fearful for their jobs with the move from a refinery facility to—potentially—an import facility. The impact will, indeed, be felt by those directly working in the refinery, but also potentially by small businesses and those working in the wider supply chain around Grangemouth.

Grangemouth already struggles with high levels of social deprivation, and the ultimate closure, potentially, will be felt acutely in the town. What assessment has the Scottish Government made of the wider impact of the change on the small and medium-sized enterprise sector, supply chains and Scottish gross domestic product? What discussions has the cabinet secretary had with trade unions and the management of the refinery on which he can give additional information? Finally, will the Scottish Government work with me, as the constituency MSP, to set up a task force to support those who could be affected?

We absolutely recognise the uncertainty, anxiety and feeling of despair that the announcement will place on a range of people and workers associated with Grangemouth. I give my assurance that I will work collaboratively with all partners to ensure that any impacts of this and subsequent decisions are mitigated as far as possible.

It is important to note that Grangemouth remains an important asset in Scotland’s energy future. We have therefore committed to publishing a just transition plan for Grangemouth in the spring, and work on that is well under way. We have engaged with business, the local community and wider stakeholders, and we will continue to do so over the coming weeks and months.

As I have set out, I met this morning with the trade unions and assured them of my support and that this Government is committed to securing jobs at the Grangemouth site. I agree with the unions that we must succeed in securing a just transition for workers. We will work with the unions, MSP colleagues, workers and wider stakeholders to ensure a sustainable future for the refinery and support those who may be affected by what happens at the site.

In its discussions thus far with the UK Government, which has reserved responsibility for fuel security, and Petroineos, what assurances has the Scottish Government been given regarding the matter? Has it asked the UK Government to conduct a risk assessment to test any assurances?

Furthermore, it is only at a very early stage that there is potential for a sustainable future for the site beyond just the importing of fuel. What further steps does the Scottish Government anticipate taking to move the site from the potential for a just transition to an actual just transition, be it in sustainable aviation fuel or hydrogen? Will the cabinet secretary commit to keeping members updated on any progress?

Through the refinery’s maintenance periods, Grangemouth imports fuel from other markets; therefore, the site already has the ability to operate as an import terminal. My understanding is that this announcement is the preparatory work to enable that to happen at a greater scale. Following our meeting with Petroineos this morning, I wrote to the Petroineos trading chief executive to seek assurances from him, along with other asks, that the business will ensure that Grangemouth’s role as a source of domestic road and air fuels will continue for years to come.

My officials remain in regular dialogue with the UK Government. Given the reserved responsibilities of the UK Government, I have written today to the Secretary of State for Energy Security and Net Zero to ask for an urgent meeting. I have been clear in the letter that it remains my firm preference that the refinery should continue operating for as long as possible. We will continue to engage proactively with Petroineos as we develop our just transition plan for Grangemouth, and I give a commitment to keep all members updated on that as it progresses.

There is a considerable degree of interest in putting a question to the cabinet secretary. I will seek to take questions from as many members as possible, but I will need members’ co-operation and succinct questions and answers.

I believe that the Secretary of State for Energy Security and Net Zero has spoken by phone with the chief executive of Petroineos, and I note that the cabinet secretary has written to the chief executive. Will the cabinet secretary undertake to meet the chief executive, and will he also undertake to press for a meeting with the secretary of state? As we learned from experience in 2016, it is very important that both of Scotland’s Governments work closely together on the matter. That is what the people of Grangemouth would expect, at the very least. Will the cabinet secretary give assurances that he will have those meetings and that everything will be done co-operatively, in order to do what is right for the people of Grangemouth?

Yes. In my initial answers to Michelle Thomson, I have given confirmation on both of those matters. Just to provide absolute clarity, however, the offer of a meeting came from Petroineos in its initial correspondence to me. I have since responded, saying that I absolutely would like that meeting to take place in very short order. I also wrote to the secretary of state today, asking for a meeting in a collaborative space, to look at what we can do together and to consider all potential options to extend the potential life of the refinery. We understand the challenges in achieving that. A very challenging situation has been outlined, but we will endeavour, working with Petroineos, the UK Government, trade unions and other partners, to do everything possible to ensure that there is a longer period for the refinery and a more sustainable future for the wider Grangemouth site.

Hundreds of families across central Scotland will be anxious today after the announcement of the proposed closure of the refinery. For years, Grangemouth has been synonymous with Scottish industry. It is strategically important for Scotland and, indeed, the whole of the UK, and it plays an important role in providing fuel security.

When was the cabinet secretary first told this devastating news? Can he detail the Scottish Government’s prior work with Petroineos on net zero transition and when it started? What plans are in place to secure jobs and the future of Grangemouth?

As Jackie Baillie would expect, we have been aware for some time that the business has been considering its future transition options, and we have been working with it as part of that. Like all refineries across the UK and across Europe, Grangemouth will have been considering a range of commercial factors as part of that, given the wider geopolitical and economic situations around the world.

We were notified by the business on the morning of Tuesday 21 November, at the same time as the workforce, of Petroineos’s specific plans—as announced in the media yesterday—to commence preparatory work for the construction of the import terminal at Grangemouth and Finnart. Given that the refinery is more than 100 years old, that potential has been on the horizon for some time, which is why work on a biofuel refinery, the opportunity for the wider site to be part of the carbon capture cluster and the opportunity for the development and usage of hydrogen has been part of what we have been doing.

I hope to give colleagues from all parties an opportunity tomorrow afternoon to discuss some of that in greater detail, and I will be happy to share details with colleagues who request them in writing.

I have met unions and have spoken to residents. Rightly, they are concerned about what yesterday’s sudden announcement means for Grangemouth. My thoughts—like those of many MSPs, I am sure—will be with those who are affected. The lack of information is causing concern among the community, and I believe that an urgent summit is required to provide certainty about what comes next. Will the cabinet secretary consider convening that summit, and will he meet workers with me at the site?

As I set out in my initial response to Michelle Thomson, I met Unite the union and the STUC and have given a commitment to continuing engagement with the trade union representatives, not least to discuss options and ideas that they may have for the wider Grangemouth site and for the refinery. There will be an opportunity tomorrow afternoon for Gillian Mackay to discuss some of those ideas with me. I am more than open to considering the opportunities that may arise from such a summit and whether meeting workers directly at the site with her might help to assuage some concerns and answer questions that they may have.

If I heard the minister correctly, he said that 2025 might not be the end for the refinery—that its life could be extended. What factors might be considered in extending that life, and what support is offered by the Government to make that happen?

It is not a hard-and-fast decision. A final decision has still to be taken. I do not want to set unrealistic expectations that the situation is not incredibly challenging, given the age of the refinery, its relative efficiency and the global factors at play in the energy costs that it faces and the costs of the fuel that it puts out. The margins are becoming incredibly challenging. I am looking at everything that I can do within the resources that we have, and I am looking to work with UK colleagues on the ideas that I set out in response to Jackie Baillie’s question, such as carbon capture, hydrogen and a biofuel refinery, to make sure that the wider Grangemouth site continues to be a heart of industrial activity. We will continue to look at those areas and will provide as much support as we can.

Last year, Scotland’s North Sea sent more than £9 billion of revenue to the UK Treasury, yet it looks as though we are heading towards “Grangemouth no more”. The refinery is of strategic national importance, and the Scottish Government has intervened decisively twice before to help to save the plant—in 2008 and 2013. What are the prospects for its doing so again?

We are looking at everything that we can do to ensure continued industrial activity at the Grangemouth site. It is important not to be too alarmist in the narrative that we put forward. This is about the refinery, not the wider Grangemouth site and the wider businesses and operations that are based there.

Obviously, the Grangemouth refinery is incredibly important, strategically and as an economic asset. We will continue to look at all that we can do—given the answers that I have already given—alongside colleagues in the trade union movement, Petroineos and the UK Government, on anything to extend the life of the refinery. However, I cannot underline enough the challenges that are currently faced.

The news from Grangemouth is a hammer blow to the industry and the local economy. The devolved Government has set out to demonize the oil and gas industry at every opportunity. Along with Labour, it is against new production in the North Sea and would prefer that we rely on imports.

The SNP has accepted the Greens into Government. The Greens want to shut down the oil and gas industry, and the First Minister said two months ago that he wanted to end Scotland’s role as the oil and gas capital of Europe. Does the cabinet secretary now accept that the message that the Government is sending out is putting thousands of jobs at risk—including those at Grangemouth?

I am very sorry that Douglas Lumsden has chosen to take that tone; it is not the tone that others have taken. In fact, Petroineos said that its decision had nothing to do with decisions that have been taken by either the Scottish Government or the UK Government; its decision was taken because of global factors, and it is a situation that refineries not only in the UK but around Europe face.

Unfortunately, the narrative that Douglas Lumsden has attempted to set out is entirely unhelpful and does nothing to help the workers that are affected.

I remind members of my voluntary entry in the register of members’ interests. Does the cabinet secretary stand by his statement that the closure of the Petroineos oil refinery at Grangemouth is a commercial decision that will future proof the site, or does he agree with me that it is a strategic national asset, that the jobs are strategic national manufacturing jobs and that this is about a strategic national energy supply, the future of which should not be determined by billionaire absentee owners?

I have engaged constructively with the trade union that is directly involved at the site—Unite—and the STUC, and there is a shared understanding of the need to ensure that a just transition happens not only at the refinery but also at the wider Grangemouth site.

I hope that Richard Leonard is able to attend the discussion that we will have tomorrow to set out in more detail some of the work. I agree with him that Grangemouth—not just the refinery, but the wider site—is of strategic importance. However, it is privately owned by the joint venture of Ineos and PetroChina, and they have commercial decisions to make. We are looking to do what we can to support those decisions going forward, but the resources that we have—and that the UK Government has—need to be considered.

We will work with the trade union movement, the joint venture partners and the UK Government to consider all that we can do to extend the life of the refinery.

That concludes the urgent question. I thank members for their co-operation, which meant that I was able to take a supplementary question from every member who sought to ask one.