Scotland: Grangemouth refinery closure announced

Isbel Lázaro.

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Inspenet, November 29, 2023.

The Grangemouth refinery in Scotland, with a capacity of 150,000 barrels per day, will cease operations to be transformed into a fuel import terminal, according to plans disclosed today by Petroineos .

Petroineos, a joint venture between PetroChina and Ineos based in the United Kingdom, announced that it will soon begin preliminary work, projecting its completion within 18 months. During this period, no changes to the current situation are anticipated.

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We currently plan to continue refining operations until spring 2025.“stated Franck Demay, CEO of Petroineos’ refining operations.”This is a necessary step to adapt our activity to the decrease in demand for the type of fuels we produce.“he said, adding that the exact schedule for the reconversion has not yet been determined.

As part of its plans, Petroineos has said it is assessing the feasibility of erecting a biorefinery at the Grangemouth location. According to Ineos, the closure of the refinery will not significantly impact Grangemouth’s petrochemical operations or the North Sea Forties Pipeline System (FPS), which is directly linked to that location.

The refinery represents one of the main suppliers of road fuel in the densely populated central region of Scotland and is also the main supplier of aircraft fuel to Scotland’s main airports.

Implications of refinery closure

The Unite union has raised questions about the UK’s energy security following the closure of the refinery, however Petroineos has backed the plan, arguing that it will facilitate the import of refined petroleum products for subsequent distribution throughout the UK. According to the company, preparatory work will enable the import of petrol, diesel and aviation fuel to Scotland via the Firth of Forth. In addition, the company is exploring plans to transform its current export terminal at Finnart, located on the Clyde estuary and connected to Grangemouth by a pipeline, into a diesel import facility.

Market participants have noted the difficulty of predicting the impact of the refinery closure on petroleum products markets, given the timing of the change. In the crude oil market, it is anticipated that it will have some impact on British demand for light sweet oil.

According to Vortexa data, in the last 12 months, Grangemouth imported 108,000 barrels per day of light sweet crude through the Finnart terminal, including 44,000 b/d of US WTI and approximately 30,000 b/d from the Norwegian Statfjord fields, Gullfaks and Troll.

Grangemouth also sources Forties crude oil from the North Sea directly through the FPS, resulting in savings on transport costs. However, its receipt of Forties has dropped to around 23,000 b/d in the past 12 months, equivalent to approximately a cargo of 700,000 barrels a month. In 2016, the refinery used to receive up to 80,000 b/d from Forties.

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