Grangemouth refinery: economic contribution assessment

Economic Contribution of the Grangemouth Refinery

On 21 November 2023, Petroineos Manufacturing Scotland Limited (“Petroineos”) confirmed that it intended to commence preparatory work to enable the future conversation of the Grangemouth Refinery to a finished fuels import terminal. Following this announcement, then Cabinet Secretary for Wellbeing Economy, Fair Work and Energy, Neil Gray MSP, committed to sharing with the Economy and Fair Work Committee of the Scottish Parliament an assessment of the Grangemouth Refinery’s economic contribution.

To ensure a robust and independent analysis of the data provided, the Scottish Government commissioned PricewaterhouseCoopers LLP (“PwC”) to conduct the assessment and Petroineos agreed to share data with PwC to enable the analysis to be carried out. The Scottish Government’s Office of the Chief Economic Adviser conducted a final review of the assessment following the presentation of findings to the Scottish Government.

The final assessment was shared with the Scottish Ministers in August 2024 has now been published online, accessible here:

Economic Contribution of Grangemouth Refinery | Scottish Enterprise (scottish-enterprise.com)

Petroineos announced on 12 September 2024 that refining will cease at Grangemouth during Q2 2025, following which finished fuels will be imported directly into Grangemouth. The assessment was completed before Petroineos made its closure announcement in September 2024.

The assessment is a product of the Grangemouth Refinery’s recent historical economic contribution, with data being provided by Petroineos during the period of January 2024 to May 2024. The analysis shows estimates of the economic footprint of the Grangemouth Refinery in terms of the number of Full Time Equivalent (“FTE”) jobs and Gross Value Added (“GVA”) that are supported both directly and in the immediate supply chain. It can be interpreted as the immediate direct effect of the Refinery’s closure on its own and its supply chain’s business, as reflected by FTE jobs and GVA. The analysis also attempts to provide some information about the potential local impact of the Grangemouth Refinery’s closure.

Utilising data provided by Petroineos, PwC estimates that the Grangemouth Refinery employed 518 people (on an FTE basis) in 2023. Whilst this represents only a small portion (0.5%) of the working age population in the Falkirk council area (102,021 according to ONS), it does represent a set of relatively well paid and skilled technical jobs. Refinery workers at Grangemouth earn £53,000 per year on average, significantly above the Scottish average of £35,000 for a full-time worker. Accounting for its supply chain and the spending of its employees in the wider economy, the Grangemouth Refinery supports 2,808 FTE jobs.

PwC estimates that, in 2023, the Grangemouth Refinery provided £404 million in total GVA, of which £179 million is direct, £180 million is indirect, and £44 million is induced. Of the refinery’s UK supply chain spend, 85%, or £290 million, was in Scotland.

The Scottish Government will continue to engage with Petroineos throughout the progressing transition period to understand in greater detail the impact that the Grangemouth Refinery’s future closure will have on the local and national economy.