UpdateINEOS prepares for Grangemouth shutdown

24 April 2008 15:38  [Source: ICIS news]

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By Mark Watts

 

LONDON (ICIS news)--INEOS was preparing on Thursday to fully shut down its 200,000 bbl/day refinery at Grangemouth, Scotland, on Saturday after pension discussions with the union Unite to avert a strike broke down.

 

The planned strike has forced INEOS Olefins to close the site’s two crackers and INEOS Polyolefins to declare force majeure on polyolefins products, while the closure could have wider effects on fuel supplies to Scotland and the north of England.

 

UK business secretary John Hutton told Parliament earlier there was no need to take emergency steps to ensure supplies, saying the industry was confident localised shortages would be restored quickly.

 

BP, however, has said the shutdown could impact on North Sea oil and gas supplies as the Grangemouth site plays a key role in the Forties Pipeline System – a network which transports 700,000 bbl/day of liquids to the British mainland.

 

The system feeds crude oil into the refinery and BP’s gas separation plant at Kinneil – which receives crude from more than 30 oil fields – takes power and steam from the Grangemouth site.

 

Up to 1,200 workers plan to strike on April 27 and 28 over plans to end the final salary pension scheme for new workers.

 

Talks began through the conciliation service Acas on Tuesday but broke down as Unite rejected an offer from the company to take the proposals off the table for three months of discussion, according to INEOS.

 

“We have done everything we can to help resolve this dispute,” INEOS Olefins CEO Tom Crotty said. "The plain fact is that the union seems hell bent on pursuing a strike that will cause chaos and disruption for the people of Scotland and across the UK."

 

Meanwhile, INEOS has issued legal proceedings against the union for allegedly accusing it of stripping £40m ($80m/€64m) from the Grangemouth pension fund.

 

INEOS has shut its G4 and KG crackers, which have a nameplate capacity of 320,000 tonnes/year and 725,000 tonnes/year ethylene respectively and both produce around 190,000 tonnes/year of propylene.

 

There is also a 45,000 tonne/year propylene producing fluid catalytic cracker linked to the refinery

 

However, polypropylene buyers in Europe said the force majeure on polyethylene and polypropylene products would not have a big impact as demand for the plastics was seen as weak.

 

Nel Weddle and Linda Naylor contributed to this article

By: Mark Watts
+44 20 8652 3214

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