UK to invest o200 million in site of oil refinery closure

A $200 million ($250 million) investment was promised by the UK government on Sunday for the location of Scotland’s sole oil refinery, which is scheduled to close this year.

The government would “ensure the long-term future of the industrial site” by investing in “new opportunities” at Grangemouth in central Scotland, according to Prime Minister Keir Starmer.

Citing a decline in demand for gasoline products, Petroineos, the owners of the Grangemouth refinery, made the decision in 2023 to turn the oldest refinery in the UK into an import terminal. More than 400 jobs will be lost as a result of the shutdown.

Starmer announced that o200 million will be invested by the national wealth fund, a publicly-owned green energy fund hoping to encourage private investment in renewables and boost Britain’s bid to become net-zero by 2050.

“We will stand behind this symbol of Scotland’s industrial brilliance,” Starmer told the Scottish Labour conference in Glasgow.

There is a “huge opportunity for renewal” at the facility, which might have a future in hydrogen energy or biofuels, for example, according to Starmer, who won an election last year by promising to transition to sustainable energy.

In a statement, the government said it was seeking to “identify a viable, low carbon industrial future” for Grangemouth and also offered funds for staff retraining.

Starmer stated that “the oil and gas in our waters is also vital for our security” and that the switch to renewable energy “must be managed pragmatically.”

“Oil and gas will be part of the future in Scotland for decades to come,” added Starmer, whose Labour government has planned to ban new oil and gas exploration in the North Sea.

Unite, one of the two biggest trade unions which has campaigned against the refinery’s closure, welcomed the announcement as a “step forward in the right direction”.

In 2024, the governments of the United Kingdom and Scotland have already committed to investing $100 million in “local energy projects” to generate employment in the Grangemouth region.

As the nation rushes to phase out fossil fuels, Britain made history last year when its last coal-fired power plant closed. By the end of the decade, the government also intends to stop selling gasoline and diesel vehicles.

But there are worries that countries that produce a lot of oil, like Scotland, would find it difficult to transition to renewable energy sources while safeguarding employment in the fossil fuel sector.