Grangemouth has ‘exciting’ future, says consultant – Daily Business

A consultant who produced the report on the Grangemouth oil refinery site said today that it faces an “exciting” future if its recommendations are acted upon quickly.

MPs on the Scottish Affairs Committee heard that the site’s prospects had improved at “transactional pace” following swift action by the incoming Labour government at Westminster, working alongside the Scottish government and the refinery owner Petroineos.

Anu Bhambi, who helped write the Project Willow report, said hundreds of potential uses had been whittled down to nine projects in the renewables sector and that “the first one, two or three” could be operational by the end of the decade “if not before”.

However, it depended on the willingness of investors and the continued support of governments who had to create the right fiscal and regulatory conditions and could not afford to be diverted from making it work.

“This is really exciting,” he said. “It is a real opportunity for change in the UK and is applicable to other opportunities. We have just got to maintain focus.”

Iain Hardie, head of legal and external affairs at Petroineos, repeated an earlier declaration that politicians had been warned five years ago that the refinery faced an uncertain future because of unsustainable losses and a declining market for its product.

Since 2011 shareholders had poured over £1 billion into the site and lost £600m “and that has remained a constant”, he said, with losses running at $1.5m a day.

He said the regulatory and fiscal framework was not conducive to investing in low carbon fuels and that meant being left with several hundred acres of brownfield land “absent of intervention by the Scottish or UK government”.

He said there was “rhetoric and repeated statements by governments that they would leave no stone unturned to ensure the refinery’s continued operation. Both were given access to data to make an investment and neither government chose to do that.

“I can only presume they drew the same conclusions we have drawn that to continue with refining operations was not an economic proposition and therefore they were not prepared to put taxpayers’ money into it.”

It was the arrival of Ed Miliband as UK Energy Secretary last summer that changed the mood. “Mr Mliband and his team just ‘got it’ in a way that we had not had before,” said Mr Hardie.

“With his leadership and the day-to-day leadership by Mr [Michael] shanks [Energy Minister] and similarly with Ms [Gillian] Martin [Scottish acting Energy Secretary] we have driven this at transactional pace”.

He added that Project Willow, which was a joint government and company initiative, had “articulated a very powerful case for change. My hope is that this committee will hear what we are saying and understand the rigour and discipline applied to this.”

He also hoped that the £200m allocated to the site’s transition by the Prime Minister from the National Wealth Fund will only be used “for the most difficult projects”.

He rejected claims that the closure of the refinery was an “act of industrial vandalism”, a phrase he found “troubling and unnecessary”. Employees and local trade union representatives “understood the position the refinery was in and the reasons for the closure”.

The 18 months redundancy terms were a “security blanket” for those losing their jobs. Mr Hardie confirmed that 470 employees were consulted, of which 377 have accepted voluntary redundancy and 28 will be made compulsorily redundant. The 18 apprentices at the site will be able to complete their training while 65 employees will be required at the new terminal.

Colin Pritchard, external relations director at Ineos, said redundancies were also likely at its operations, but he could not provide details on numbers or terms because a consultation is currently under way.