INEOS Grangemouth petchems complex to remain offline

23 October 2013 12:41  [Source: ICIS news]

Grangemouth refineryLONDON (ICIS)--The Grangemouth, UK, petrochemicals complex operated by Switzerland-based INEOS is to remain closed, the company confirmed on Wednesday.

The company told employees on Wednesday morning that the site will remain offline after being shut down early last week in preparation for anticipated industrial action. Liquidators will be appointed within a week, INEOS added.

Petroineos, the INEOS/PetroChina joint venture that co-owns the Grangemouth oil refinery, will now decide whether to restart the facility, but UK energy minister Edward Davey said he has received assurances that it will reopen.

“INEOS have informed us that the refinery will stay open and the management wish to restart full operations as soon as possible,” he said.

The majority of Grangemouth employees voted in favour of a strike after trade body Unite called a ballot on the measure.

Unite attributed the vote to INEOS’ decision to launch an investigation into the conduct of site employee representative Stephen Deans, but INEOS had made several public statements at that point about the site’s lack of competitiveness – attributed in part to the financial burden of the site’s pension scheme – and warning that Grangemouth could close by 2017 if a solution was not found.

Industrial action first took the form of an overtime ban and a work-to-rule, but Unite announced plans for a 48-hour walkout from the morning of 20 October.

The strike was called off after negotiations between INEOS and Unite at the Glasgow offices of industrial dispute mediator ACAS broke down on 16 October. Petrochemical and oil refining units had already begun to be taken offline in preparation for the walkout, and INEOS responded that the site would remain offline for the rest of the week.

The company issued a list of proposals to Grangemouth employees related to the “survival plan” it had issued in late September, with measures including pension scheme reforms and the need to secure investment to upgrade site infrastructure to allow the import of shale-derived gas feedstocks from the US.

Employees had until 21 October to respond to the proposals, and INEOS said on Wednesday that half of the 1,370 employees at the site had voted against the proposals, leading it to decide to leave the petrochemicals complex offline.

According to INEOS, nearly all administrative staff voted in favour of the proposals, while the majority of shop floor staff voted against them.

INEOS Grangemouth petrochemicals chairman Calum MacLean said, “This is a hugely sad day for everyone at Grangemouth. We have tried our hardest to convince employees of the need for change but unsuccessfully.

“There was only ever going to be one outcome to this story if nothing changed and we continued to lose money,” he added.

The decision comes in spite of a UK Treasury announcement on 22 October that Grangemouth has been added to a list of projects that pre-qualify for infrastructure loan guarantees. The UK Guarantee scheme pre-qualification is for the construction of ethane importation and storage facilities at the site, according to the Treasury.

Commenting on the news, Chemical Industries Association (CIA) CEO Steve Elliott said: "This is a sad day for Grangemouth, for Ineos, for its workforce and for the economy of Scotland. We hoped the company Survival Plan would be accepted by the workforce as it offered long-term sustainability.

“The best way of guaranteeing jobs is commercial viability – INEOS offered a route to that for Grangemouth and I am sorry the workforce could not agree to that in sufficient numbers,” he added.

According to ICIS data, INEOS’ petrochemicals complex at Grangemouth produces 295,000 tonnes/year of benzene, 65,000 tonnes/year of butadiene, 340,000 tonnes/year of ethanol, 320,000 tonnes/year of polyethylene linear low density, and 285,000 tonne/year of polypropylene.

The complex also has two ethylene units producing 320,000 tonnes/year and 700,000 tonnes/year, and three propylene lines producing 190,000 tonnes/year, 160,000 tonnes/year and 45,000 tonnes/year.

According to reports, up to 800 jobs could be impacted by the announced closures.

By: Tom Brown
+44 208 652 3214

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