Grangemouth buyer talk not credible, owner says

Talk of potential buyers for the Grangemouth refinery has been a distraction with no credible offers having come forward, bosses at Petroineos have said.

The refinery is to close next year with the loss of around 400 jobs, with plans to convert the site into a fuel import terminal.

A number of expressions of interest have been made since the announcement.

But the firm’s regional head of legal and external affairs Iain Hardie said none of them could pass "the most basic financial or operational due diligence" tests.

Both the Scottish and UK governments, as well as trade unions, have hit out at the decision to close the facility.

They have repeatedly urged Petroineos - a joint venture between Ineos and PetroChina - to pause the decision to allow for a transition.

Mr Hardie said the refinery was "not commercially viable" and was losing $500,000 (£400,000) a day - meaning the pool of realistic investors was "small if not non-existent".

He also said talk of a buyout had "definitely been a distraction" and that staff recognised the "financial and operational challenges" the business faces.

Mr Hardie said: "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 is Scotland's only refinery and accounts for about 14% of the UK's overall refining capacity.

The Scottish and UK governments have said they have a joint plan to secure a long-term future for the site.

Petroineos confirmed on 12 September that it was going to close the refinery - with Scotland's public finance minister, Ivan McKee, telling the BBC the next day that he believed there "absolutely is a potential buyer".

He also said that the local MSP Michelle Thomson was "working closely with them at the moment".

There has been speculation about other interested parties since then - most recently last week, when Dubai firm Trading Stack DMCC issued a press release saying it was looking to acquire the Grangemouth refinery.

Mr Hardie said that Petroineos would "of course" consider any genuine bids, but he did not believe it was "credible financially or operationally" to keep the refinery open.

"This is a refinery that is currently losing half a million dollars a day", he said.

"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 said workers at the refinery were committed to managing the end of its operations safely, adding: "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."

Workers rallied outside Holyrood on Thursday to demand the refinery remains open.

Sharon Graham from the Unite union said Grangemouth could be sustainable as a site producing aviation fuel, calling on the Scottish and UK governments to help change the direction.

She also said the refinery could still have a bright future which would see new investors come forward.

Ms Graham wrote to UK Energy Secretary Ed Miliband last week saying that the refinery could be converted to produce sustainable aviation fuel "relatively easily", something Petroineos rejects.

Later in the week, she told MSPs the company's books gave a "distorted picture" of the financial situation at the plant, which the firm also rejected.