UK's Grangemouth refinery ends crude oil processing

The UK's 150,000 b/d Grangemouth refinery in Scotland has stopped processing crude oil and is being decommissioned, its owner, Petroineos, said April 29.

Petroineos announced plans to shutter the refinery late 2023, saying huge operating costs and new large-scale foreign competitors had made the 100-year-old plant structurally unprofitable.

"From today, we will be importing all the products necessary to meet Scotland's demand for transport fuels," Iain Hardie, regional head of legal and external affairs at Petroineos, said in a statement.

Once responsible for supplying roughly 70% of Scotland's fuel, the Grangemouth closure is expected to contribute to a growing oil product deficit across the UK.

As the country's only refinery equipped with a hydrocracker, the site was rare in its design to maximize distillate supplies and produced roughly 15% of the nation's diesel.

However, union pressure over avoiding job losses and energy security concerns failed to deter plans by Petroineos -- a joint venture between the UK's Ineos and state-owned PetroChina -- to close the refinery in Q2 2025.

"Our colleagues have shown incredible commitment, dignity and resilience during months of uncertainty regarding the future of this facility, through the consultation period, phased shutdown and the start of refinery decommissioning," Hardie said.

As part of the refinery shutdown, Petroineos invested GBP50 million in a nearby import and distribution terminal to handle additional fuel oil import demand for Scotland and the north of England.

The refinery closure could translate to a 10% increase in UK diesel and gasoil imports, removing a source of around 50,000 b/d of diesel/gasoil and 20,000 b/d jet/kerosene, according to an analysis by S&P Global Commodity Insights.

Record fuel imports

Previous UK refinery closures, including Billingham, Coryton and Milford Haven, have contributed to growing UK fuel imports, which have reached record volumes in recent months.

The country's total net oil imports hit 31.6 million mt in March 2025, up 7.2% year over year and the highest on record, according to the latest data from the UK's Department for Energy Security & Net Zero.

In Q4 2024, domestic production of refined products totaled 1.5 million mt, reflecting a 13% annual increase, DESNZ data showed.

The Grangemouth closure leaves five active refineries in the UK -- Humber, Lindsey, Stanlow, Fawley and Pembroke -- with a total capacity of around 1 million b/d.

On the south coast, ExxonMobil plans to expand its low-sulfur diesel capacity at its Fawley refinery 40% by 2025 to capture local diesel demand and adjust its yields to reflect UK consumption.

However, analysts have warned that the Grangemouth closure could be the first of many. Stalled oil demand growth and low-cost competitors have put pressure on margins, ending the sector's period of record profits after 2022.

Low-carbon hub plans

The UK and Scottish governments have set out plans to sustain industrial activity in Grangemouth by developing it into a "flourishing low carbon hub" and have committed over GBP225 million ($290 million) in investment for the site.

In March, the two governments published the results of a GBP1.5 million "Project Willow" report conducted by consulting firm EY, which proposed nine potential developments over the next 20 years.

Short-term projects that could be brought on stream by 2030 included chemical and waste recycling, while the report recommended that sustainable aviation fuel and ammonia could pose strong opportunities for the area.

The EY report said its proposals could create up to 800 jobs in the industrial hub by 2040, potentially offsetting 400 redundancies associated with the refinery closure.

However, major developments will rely on significant capital investment, reaching up to GBP2.5 billion in the case of the most ambitious 'e-fuel projects'.

Among proposed measures to draw investment, the government was advised to accelerate a final investment decision on Scotland's "Acorn" carbon capture and storage project and delay a 2030 cap on HEFA biofuel -- currently the main production pathway.

Speaking to Platts, part of S&P Global Commodity Insights, April 29, Scottish Parliament minister Michelle Thompson said that government funding made available for co-investment with the private sector had already attracted "considerable interest" around potential projects, but said plans could take time to materialize.

Meanwhile, Sharon Graham, general secretary of the trade union Unite, said the UK and Scottish governments "have utterly failed to protect refinery jobs" and warned that "workers will not forget or forgive."

The union has called for fast-tracked projects to develop SAF supply at Grangemouth, initially using existing refining infrastructure to co-process biogenic feedstock with crude oil.

Ineos petrochemicals future

The Ineos Forties Pipeline System and petrochemicals business, also located on the Grangemouth complex, will survive the oil refinery, though company Chairman Jim Ratcliffe has become a fervent critic of the UK's industrial policy.

In an April 29 statement, Ratcliffe said that Ineos Grangemouth faces a tax bill of GBP15 million for its carbon dioxide emissions, adding that the company "will be forced to pause vital investment" in the business to meet its compliance costs.

"This is not just INEOS, this is a reality for British manufacturers up and down the country: Carbon emissions taxes and excessive energy costs are squeezing the life out of the sector," he said.