30 September 2013 16:48 [Source: ICIS news]
LONDON (ICIS)--INEOS has launched a survival plan to ensure the long-term future of its loss-making Grangemouth refining and petrochemicals site in the UK partly by switching to ethane feedstock imported from the US, the Switzerland-headquartered company said on Monday.
“Everyone will have to give something if this business is to survive – we don't have a Plan B,” said Calum MacLean, chairman of both Grangemouth Petrochemicals and Grangemouth Refining, as the company unveiled a plan that would require workers to accept pension changes, government grants, plant closures and job losses.
The Grangemouth site on the banks of the Firth of Forth in Scotland, which INEOS took over from BP in 2006, is losing £10 million a month ($16.1m, €11.9m), the pension scheme for its workers is £200 million in deficit and the pension costs had reached an unsustainable 65% of salary, INEOS said.
With the North Sea gases – which provide the Grangemouth production facilities with raw materials – running out, the petrochemicals site would close in 2017 at the latest without massive new investment, it added.
INEOS indicated that it is willing to invest £300 million to facilitate the development of a new gas terminal to bring in ethane from the US, making Grangemouth the beneficiary of a scheme identical to the one the company is currently executing in Rafnes, Norway.
The company has asked the Scottish and UK governments for grants and loan guarantees totalling £150 million to support the venture at the site, which includes the 210,000 bbl/day Petroineos refinery.
On 23 September, INEOS warned that Grangemouth remained insufficiently competitive to justify the investment that would enable it to switch to ethane, derived from the US shale gas boom.
Another part of the survival plan aimed at making Grangemouth more competitive involves requesting all employees to accept “a superior money purchase pension scheme”, with the existing final salary scheme to close, INEOS said.
A number of plants would be closed and headcount would be reduced if the plan went ahead, it added.
MacLean added: “The current business is unsustainable. We have worked incredibly hard to put together a survival plan that asks something of everyone. If everyone agrees to it, Grangemouth has a future. If not, Grangemouth Petrochemicals will close.”
On 27 September, workers at the Petroineos refinery voted in favour of industrial action following a decision made by INEOS Petrochemicals UK to place Stephen Deans, a trade union representative and member of the local Falkirk Constituency Labour party (CLP), under investigation.
INEOS Petrochemicals UK said the investigation into Deans was to determine whether Deans' activities – regarding conduct in the replacement process for departing Labour MP Eric Joyce – were in line with his role as an employee and union representative at the Grangemouth site.
($1 = £0.62, €1 = £0.84)
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