Dangote Petrol: Scotland’s Only Refinery to Shut Down, Owners to Convert Facility to Another Use

Dangote Petrol: Scotland’s Only Refinery to Shut Down, Owners to Convert Facility to Another Use

  • Scotland's only refinery, the Grangemouth refinery, is set to shut down in the first quarter of 2024
  • The refinery's owners said that the facility would be converted into a fuel import terminal and storage for biofuels
  • The development comes as the Dangote Refinery refinery began the production of production in September 2024

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The Grangemouth refinery belonging to Scotland is set to close in 2025.

The refinery’s owners confirmed this, stating that the facility has struggled to compete with new and more complex facilities in Asia, Africa, and the Middle East.

The Grangemouth refinery, which began operation in 1924, expanded its production into petrochemicals in the 1950s.

Grangemouth refinery to cease operation
Grangemouth refinery announces plans to cease operations Credit: Andrew Milligan - PA Images / Contributor
Source: Getty Images

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Owners to transition the site to another use

However, the 150,000bpd capacity can no longer compete with massive new refineries such as the newly completed Dangote refinery and others that major oil companies and refiners have built in recent years in Asia, Africa, and the Middle East.

According to a report by BusinessDay, Petoineos, the refinery’s owner, has announced its intention to cease operations at Grangemouth and transition the facility to a finished fuels import terminal and distribution hub during the second quarter of 2025.

The company said the INEOS businesses at the refinery, such as INEOS O&P UK and INEOS FPS, will continue, as usual, delivering high-quality services and products to its customers and will not be affected by the change.

The refinery’s closure will result in 400 job losses, as the number of employees at the site will be reduced to 75 from 475.

The firm said that the site’s conversion to a fuel import hub would safeguard Scotland's fuel supply but require fewer than 100 employees.

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More refineries shut down

Reports say major oil firms, including Shell and Eni, announced they would convert European refineries to meet demand for base oil and biofuels.

The reports stated that in January 2024, Eni said it would convert its refinery in Livorno into biofuels-making plant.

The announcement came after Shell said it plans to convert its oil refinery at the Wesseling site in Germany into a production for base oils.

The development comes as the 650,000 bpd-capacity refinery began petrol production in September 2024.

The Organisation of Petroleum Exporting Countries (OPEC) predicted that Nigeria’s Dangote Refinery will impact Europe’s oil industry, especially in the Northwest Europe gasoil market.

The 650,000 bpd-capacity refinery in Nigeria is expected to disrupt traditional diesel and jet suppliers, putting pressure on Europe’s refined petroleum product market.

Dangote Refinery is Europe’s biggest challenger

OPEC identified in its June Oil Market Report that the Dangote Refinery is a key player among global suppliers. Potential production increases are expected to challenge Europe’s reliance on established sources.

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The report said:

“Upside potential for higher production levels from Nigeria’s Dangote refinery, coupled with strong flows from the Middle East and new supplies from the Mexican Olmeca refinery, will likely exert pressure on NWE gasoil performance in the mid-term.”

According to reports, the Dangote Refinery began operations in January 2024 and has already started to influence global oil flows.

Standard & Poor Global said the facility’s total capacity could reshape the international crude oil market.

Dangote Refinery exports 3.5 billion litres of fuel

The oil and gas vice president at Dangote Industries Limited, Devakumar Edwin, confirmed the refinery’s first successful jet European export.

He said the facility has already exported about 3.5 billion litres, representing 90% of its production.

The refinery has faced challenges with the crude oil supply from Nigeria, Africa’s largest oil producer, leading to the import of the product from the US and Brazil.

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Refinery to source products from Africa

The Chairman of the Dangote Group, Aliko Dangote, recently addressed concerns about the facility, reaffirming its primary focus on Nigerian crude.

According to reports, the refinery was built to use Nigerian crude and add value to it within Nigeria. Dangote said this while acknowledging that supply issues are being addressed.

He said the refinery remains open to sourcing crude from other regions, including Libya, Angola, and Brazil.

Dangote Refinery strikes new deal on product buy-back

Legit.ng earlier reported that the Nigerian National Petroleum Company Limited (NNPC) and the Dangote Refinery are concluding discussions on crude oil sales by the national oil company to the Dangote Refinery in the local currency and the buy-back of refined products from the plant in naira.

According to Devakuma Edwin, the vice president of oil and gas at the Dangote Refinery, the parties may conclude discussions on the deal soon.

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Edwin also revealed that oil marketers had continued to boycott diesel and aviation fuel from the refinery, stating that they also reported the facility’s low-priced fuel to President Bola Tinubu.

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Source: Legit.ng

Authors:
Pascal Oparada avatar

Pascal Oparada (Business editor) Pascal Oparada is a Mass Communications Graduate from Yaba College of Technology with over 10 years of experience in journalism. He has worked in reputable media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner. Email:pascal.oparada@corp.legit.ng