Insanity doesn’t just run in Scottish politics, it positively gallops, usually neck and neck with hypocrisy. The pearl clutching by the Scottish Government over the decision by Sir Jim Ratcliffe to end oil refining at Grangemouth is utterly risible, even by the usual standards of SNP duplicity.
Not only has the SNP and its Green coalition partners made Scotland a hostile environment for the fossil fuel industry and manufacturing in general, but the Government has consistently treated Ratcliffe and his substantial investment in Scotland like an unwanted relative at a family wedding.
Against that backdrop, the assertion by Energy Minister Neil Gray that the closure was ‘not a decision taken because of anything that this government, or indeed the UK government, has done’, is laughable.
Petroineos, a joint venture between Ratcliffe’s conglomerate Ineos and China’s state-owned PetroChina, is set to end refinery operations at Grangemouth in 2025 and convert that part of its vast Falkirk complex into an import terminal for fuel that has already been refined. Around 400 of the refinery’s 500 jobs could be lost.
Ineos’s other Grangemouth operations, such as the Forties pipeline and its petrochemicals plant which employ around 1,000 workers, are not affected by the decision.
It is true that the Grangemouth refinery faces growing international competition, particularly from newly built refineries in Asia and the Middle East. Although it has enjoyed higher margins over the last year, courtesy of the war in Ukraine, demand for road fuels is declining and the refinery is understood to have lost around £360 million in 2020 and 2021.
Grangemouth petrochemical plant will cease operations in 2025, its owners have said
Moreover, two years ago Ineos Grangemouth chairman Andrew Gardiner told me the refinery was moving towards decarbonisation and was investing £1 billion to convert the plant to run on hydrogen. Ineos remains heavily involved in Acorn, the carbon capture, storage and utilisation project based in the north-east of Scotland, despite fears that it would withdraw following this week’s announcement.
However, it is also true that over the past decade, the SNP Government has gone out of its way to treat Ratcliffe and his investment in Grangemouth like a pariah.
When Acorn failed to win Westminster funding in 2021, Holyrood decided against supporting the project with its own cash. A Scottish Government source told me at the time that funding even a green scheme involving Ineos – Grangemouth is recognised as Scotland’s largest polluter – posed ‘challenges beyond just money’.
In 2018, Ratcliffe ruled out Scotland as a base for his £700 million project to build an off-road car, the Ineos Grenadier, amid suggestions his strained relationship with the Scottish Government was a factor. At the time, a source close to the project told me: ‘Scotland is out of the picture. There isn’t that much to recommend it when you consider the treatment Ratcliffe and Ineos have endured at the hands of the Scottish Government.’
The SNP’s antipathy towards Ratcliffe and Ineos goes back to 2013, when Grangemouth’s petrochemical business was struggling with increased competition. The prices of US chemical products had been slashed by the shale gas revolution, which enabled producers to make more ethylene, a key component in plastics, and export the surplus.
Ratcliffe wanted to do the same thing here to remain competitive and spent £50 million acquiring exploration licences for Scotland and committed to give local communities 6 per cent of the revenues from any shale gas it produced.
Ineos boss Jim Ratcliffe accused Nicola Sturgeon of hypocrisy
Ineos felt initial meetings with the Scottish Government, which at the time controlled fracking applications, had been positive.
But in 2015, First Minister Nicola Sturgeon, seeking as ever to be different from Westminster, imposed a moratorium on fracking and then, in her own words, an outright ban.
In the face of Holyrood opposition, Ratcliffe invested hundreds of millions of pounds to ship cheaper US shale gas across the Atlantic in two tankers he had built in China to a newly constructed terminal at Grangemouth. Instead of welcoming the largest industrial investment in Scotland in decades, Sturgeon and her Ministers snubbed an event to mark the arrival of fracked US gas.
Speaking to me at the time, Ratcliffe accused Sturgeon of hypocrisy and insisted the imported fracked gas secured not just the future of Grangemouth’s 1,300 workers but also jobs in the wider community. He said: ‘Whether the Scottish politicians like it or not, the shale gas which has come from the US rather than Scotland has saved 10,000 jobs in the Falkirk area.’
Ineos eventually took the Scottish Government to court arguing it had imposed an unlawful ban on fracking. You may remember Nicola Sturgeon had gleefully boasted as far back as 2017 that ‘fracking is banned, end of story’. Indeed, her boast was proudly writ large on the SNP website which stated: ‘The Scottish Government has put in place a ban on fracking in Scotland – meaning fracking cannot and will not take place in Scotland.’
However, when the case came to court, James Mure, KC, the lawyer the Scottish Government engaged with taxpayers’ cash, insisted the suggestion fracking had been banned in Scotland was, er, wrong. He told the court: ‘The concept of an effective ban is a gloss. It is the language of a press statement.’
Ineos lost the case when Lord Pentland ruled its legal action was based on ‘fundamental misunderstandings’ despite ‘ministerial statements to the effect that there is an effective ban’, because a ‘moratorium’ on fracking was not the same as a ban.
Despite Ratcliffe’s clear commitment to Scotland, the Scottish Government has consistently opposed his ambition and insulted his investment. One can argue that Ratcliffe hardly endeared himself to the SNP when he warned an independent Scotland would end up like Greece and have to be ‘bailed out’ by the EU because of its spending and lack of growth.
However, contrast the treatment of Ratcliffe and Ineos with Sturgeon’s fawning over Sanjeev Gupta and his jobless steel revolution in Scotland. Along with Gupta’s GFG empire now being under investigation over suspected fraud and money laundering by authorities in the UK and France, the tycoon is trying to sell the Clydebridge steel mill in Cambuslang which he acquired from the Scottish Government with millions of pounds of financial help from Holyrood.
The Scottish Government has also bizarrely admitted it broke state aid rules in its involvement in the sale of the Dalzell steelworks to Gupta’s business. Gupta’s company received a £7 million publicly funded loan when it bought the plants which remains outstanding.
The closure of the refinery business at Grangemouth is a huge blow to all the workers, their families and the wider community.
But what the Scottish Government’s response really shows is that First Minister Humza Yousaf’s draft plan, published in January, for a seamless ‘just transition’ for workers in the fossil fuel industry to new jobs in renewables, such as wind, is just the same old hot air.
It is ridiculous that the Scottish Government continues to extol its meaningless environmental ideals without ever explaining where affordable, low-carbon energy will come from. Insanity is doing the same thing over and over again and expecting different results.
If the SNP and the Greens really want to save jobs that rely on fossil fuels and create new green ones, they need to start being more welcoming to businesses that are investing to do just that.