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Ineos, Union Reach Deal to Save UK Petrochemical Plant

Ineos, Union Reach Deal to Save UK Petrochemical Plant
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Παρ, 25 Οκτωβρίου 2013 - 18:32
Ineos Group Holdings Ltd. Friday reached an agreement with union members to keep open its petrochemicals plant at Grangemouth, Scotland, in a dramatic U-turn on the fate of the Scottish site.
Ineos Group Holdings Ltd. Friday reached an agreement with union members to keep open its petrochemicals plant at Grangemouth , Scotland , in a dramatic U-turn on the fate of the Scottish site.

The plant shot to the top of the U.K. 's political agenda this week as lawmakers worried over the impact its closure would have on jobs and the local economy, ahead of a referendum next September on Scotland 's independence.

Earlier this week, Ineos said it would shut the plant after workers voted against a plan which management said was necessary to save the business. However, subsequent talks between the union, management and the government resulted in a reprieve for the site, saving 800 jobs.

The deal between Ineos and the union, Unite, also removes any risk to a vital oil pipeline system powered by steam from the Grangemouth site. The BP-operated Forties pipeline system carries 400,000 barrels a day of oil from North Sea fields to shore. Although the company maintained the flow of oil throughout the dispute, the prospect of a prolonged shutdown at Grangemouth raised concerns that the flow of oil could become blocked.

A BP spokeswoman said Friday's announcement would secure the flow of oil through the pipeline in the future.

Swiss-based Ineos said it would reopen its petrochemicals business and restart its refinery immediately. The refinery closed last week ahead of a threatened strike.

Grangemouth employs nearly 1,400 people at its refinery and petrochemicals plant, and supplies the majority of Scotland 's refined products, such as gasoline, heating oil and aviation fuel. However, the business has struggled in recent years as weak demand and rising costs have put pressure on the refining and petrochemicals sector across Europe .

During a news conference in Brussels Friday, U.K. Prime Minister David Cameron said the deal to keep Grangemouth open was "excellent news" that would secure thousands of jobs.

"I think sense has been seen, which is that when you have challenges and costs, you need reform that goes with the investment," Mr. Cameron added.

As part of the deal to keep the plant open, Unite agreed to a survival plan that requires members to accept a pay freeze and not to strike for three years and have their pensions adjusted.

Unite welcomed the decision to keep the petrochemicals plant open, but said the news was "tinged with sadness."

"Decent men and women are being asked to make sacrifices to hold onto their jobs," Pat Rafferty, Unite Scottish secretary, said in a statement.

Ineos and joint-owner Petrochina Ltd. (PTR) will now invest a further 300 million pounds ($486 million) in the company to offset ongoing losses and a gas terminal that will allow the company to import cheap shale gas from the U.S.

Ineos said the Scottish government has agreed to support its application for a GBP9 million grant to help finance the terminal and the U.K. government has given preliminary approval for a GBP125 million loan guarantee.

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