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Grangemouth's economic significance Why Grangemouth matters
(about 20 hours later)
The Scottish government is looking to find a buyer for the Grangemouth refinery and petrochemicals plant. Ineos says the petrochemical plant at Grangemouth is to close while the oil refinery will remain open.
The current owner, Ineos, has said the plant will close without new investment and changes to workers' terms and conditions. Around 800 jobs will be affected by the closure.
Finding a buyer for the plant will be a challenge as there is an excess of refining capacity in Europe, meaning profit margins are low. In total Grangemouth employs 1,370 staff and a dispute between union members and staff remains unresolved.
So what would be the impact of the the closure of Grangemouth? The loss of the petrochemicals plant is a major blow and now the focus will be on the refinery which is a key part of the Scottish and UK economy.
Grangemouth refines 80% of the fuel used in Scotland and it also supplies Northern Ireland and the North of England. The Grangemouth refinery supplies 70% of the fuel used at Scotland's filling stations and it also supplies fuel to Northern Ireland and the North of England.
Contingency plans are being made to replace petrol and diesel supplies if the refinery closes and experts say that fuel could be sourced from elsewhere.Contingency plans are being made to replace petrol and diesel supplies if the refinery closes and experts say that fuel could be sourced from elsewhere.
"With petrol and diesel supplies, unless there is panic buying, there should not be a problem as there are plenty of imports," says Alexander Kemp, Professor of Petroleum Economics, at the University of Aberdeen."With petrol and diesel supplies, unless there is panic buying, there should not be a problem as there are plenty of imports," says Alexander Kemp, Professor of Petroleum Economics, at the University of Aberdeen.
The number of refineries in the UK has been falling for decades and at the moment there are seven.The number of refineries in the UK has been falling for decades and at the moment there are seven.
Coryton in Essex was the most recent to close after its owner Petroplus, filed for bankruptcy in 2012.Coryton in Essex was the most recent to close after its owner Petroplus, filed for bankruptcy in 2012.
But analysts say there is still overcapacity in Western Europe and the situation has been made worse recently by cheap fuel imports from the United States.But analysts say there is still overcapacity in Western Europe and the situation has been made worse recently by cheap fuel imports from the United States.
US refineries pay around $15 a barrel less than UK refineries for crude oil, which has helped US firms to export cheap fuel to the UK.US refineries pay around $15 a barrel less than UK refineries for crude oil, which has helped US firms to export cheap fuel to the UK.
But Professor Kemp says there is a longer term issue of energy security for the UK as "we can't always rely on cheap imports of fuel".But Professor Kemp says there is a longer term issue of energy security for the UK as "we can't always rely on cheap imports of fuel".
At the moment the UK imports 47% of the diesel and 50% of the aviation fuel it needs.At the moment the UK imports 47% of the diesel and 50% of the aviation fuel it needs.
But for petrol there is currently a 20% oversupply, according to figures from the research group, IHS Purvin & Getz.But for petrol there is currently a 20% oversupply, according to figures from the research group, IHS Purvin & Getz.
Its research shows that if two refineries were to close down, the UK would rely on imports for more than 70% of its diesel and jet fuel and more than 20% of its petrol.Its research shows that if two refineries were to close down, the UK would rely on imports for more than 70% of its diesel and jet fuel and more than 20% of its petrol.
The Grangemouth refinery has an annual turnover of billions of pounds a year and has 1,370 staff. Grangemouth is an important employer and the 800 jobs lost by the closure of the petrochemicals plant are a big loss.
It also employs another 2,000 contractors and the refinery's owner, Ineos, estimates that 10,000 jobs indirectly rely on the facility. Along with the refinery, Grangemouth employs another 2,000 contractors and the refinery's owner, Ineos, estimates that 10,000 jobs indirectly rely on the site.
Due to the refinery and the associated chemicals business, the Falkirk area employs more people in manufacturing than the rest of Scotland combined.Due to the refinery and the associated chemicals business, the Falkirk area employs more people in manufacturing than the rest of Scotland combined.
"It's actually a fundamental part of the infrastructure of the chemical, petrochemical and plastics industries of the UK and it would be madness to have it shut down," said the local Labour MP, Michael Connarty."It's actually a fundamental part of the infrastructure of the chemical, petrochemical and plastics industries of the UK and it would be madness to have it shut down," said the local Labour MP, Michael Connarty.
But Ineos says the refinery is losing £10m a month and needs an investment of £300m. But Ineos says the business is losing £10m a month and needs an investment of £300m.
The Forties pipeline delivers a third of the UK's oil output.The Forties pipeline delivers a third of the UK's oil output.
The steam and power which runs the pipeline and BP's Kinneil terminal comes from Grangemouth.The steam and power which runs the pipeline and BP's Kinneil terminal comes from Grangemouth.
At the moment the supply of steam and power has not been interrupted and Ineos and union workers have been keen to maintain supplies.At the moment the supply of steam and power has not been interrupted and Ineos and union workers have been keen to maintain supplies.
But if Grangemouth is forced to close then it is not clear what happens next. But if Grangemouth's refinery is forced to close then it is not clear what happens next.
A strike at Grangemouth in 2008 shut the Kinneil terminal and that forced 70 North Sea oil platforms to shut down or reduce production.A strike at Grangemouth in 2008 shut the Kinneil terminal and that forced 70 North Sea oil platforms to shut down or reduce production.
PetroChina owns half the refinery which is operated by Ineos.PetroChina owns half the refinery which is operated by Ineos.
It can process 210,000 barrels of crude daily.It can process 210,000 barrels of crude daily.
Ineos also owns the petrochemical plant which is attached to the refinery. Ineos also owns the petrochemical plant which is due to close.
Analysts say the petrochemicals plant would struggle to run profitably without the refinery.