Petroineos deems Grangemouth buyer discussions incredible

According to executives at Petroineos, discussions regarding prospective purchasers for the Grangemouth refinery have served as a diversion, as no serious proposals have materialized. The facility is scheduled for closure next year, resulting in approximately 400 job losses, with intentions to transform the location into a terminal for importing fuel. Several indications of interest have been received since the initial declaration. However, Iain Hardie, the company’s regional head of legal and external affairs, stated that none of these proposals met “the most basic financial or operational due diligence” tests. Both the Scottish and UK governments, alongside trade unions, have criticized the choice to shut down the plant. These entities have consistently implored Petroineos – a joint venture formed by Ineos and PetroChina – to halt the decision, thereby enabling a transition period. Mr. Hardie indicated that the refinery was “not commercially viable” and incurred daily losses of $500,000 (£400,000), implying that the number of potential realistic investors was “small if not non-existent.” He further mentioned that discussions about a buyout had “definitely been a distraction” and that employees acknowledged the “financial and operational challenges” confronting the enterprise. Mr. Hardie stated: “We’ve had a number of expressions of interest but unfortunately none of those have made it through the most basic financial or operational due diligence. As a consequence we don’t have any credible expressions of interest, let alone viable bids, for the Grangemouth refinery.” Grangemouth represents Scotland’s sole refinery and contributes approximately 14% of the United Kingdom’s total refining capacity. The Scottish and UK governments have indicated their collaborative strategy to ensure the site’s enduring viability. Petroineos verified on 12 September its intention to close the refinery; the following day, Scotland’s public finance minister, Ivan McKee, informed the BBC that he was convinced there “absolutely is a potential buyer.” He additionally stated that local MSP Michelle Thomson was “working closely with them at the moment.” Since that time, speculation has circulated concerning other interested entities, with the most recent instance occurring last week when Dubai-based firm Trading Stack DMCC released a statement indicating its interest in acquiring the Grangemouth refinery. Mr. Hardie affirmed that Petroineos would “of course” evaluate any authentic offers, but he did not deem it “credible financially or operationally” to maintain the refinery’s operation. “This is a refinery that is currently losing half a million dollars a day,” he remarked. “The shareholders have invested over $1bn and have incurred simple cash losses of over $800m. This is an asset which is not commercially viable so the universe of potential investors is small if not non-existent.” Mr. Hardie stated that the refinery’s employees were dedicated to overseeing the safe conclusion of its operations, further commenting: “The work that the Grangemouth workforce have provided over the last hundred years is without question – but this is the energy transition in action. It can come as no surprise that a 100-year-old refinery will struggle in an environment where demand for its product is falling.” “We have been crystal clear from day one why we are having to make these really difficult decisions. Our focus is on getting the terminal ready and our focus is on Project Willow and making sure we create a platform for longer-term manufacturing to occur in the Grangemouth cluster.” Employees gathered outside Holyrood on Thursday, calling for the refinery to stay operational. Sharon Graham of the Unite union asserted that Grangemouth could be viable as a facility for producing aviation fuel, urging the Scottish and UK governments to assist in altering the current course. She further suggested that the refinery might still possess a promising future, attracting new investors. Last week, Ms. Graham communicated with UK Energy Secretary Ed Miliband, contending that the refinery could be adapted to generate sustainable aviation fuel “relatively easily,” a claim that Petroineos disputes. Subsequently in the week, she informed MSPs that the company’s financial records presented a “distorted picture” of the plant’s economic state, a contention the firm likewise dismissed.