UK guarantees £230m loan for Ineos’ Grangemouth oil refinery

 

The UK government yesterday said it would guarantee a £230m loan for Grangemouth oil refinery in Scotland, reaffirming its support for the region ahead of September’s referendum.

 

The Treasury said the loan – which would be used to build the largest ethane storage tank in Europe – would protect thousands of jobs in Scotland and allow work on the project to start straight away.  

 

The storage tank will used to store and process ethane from US shale gas,  at a time when North Sea supplies are on the wane.

 

“By 2016, Grangemouth will be a shale gas-based facility, essential if it is to compete in world markets beyond 2017,” said Swiss owners Ineos. 

 

Grangemouth was at the centre of a highly charged dispute with Unite union last year, after Ineos threatened to shut the plant permanently unless pay and pension reforms were agreed, putting hundreds of jobs at risk.

 

“Without doubt, this is one of the most important projects of recent times in Scotland, with implications to be felt right across the UK, not only for employment but also for manufacturing in general,” said Jim Ratcliffe, Ineos chairman. 

 

“Our ability to import US shale gas underpins the future of manufacturing at Grangemouth and across many businesses in Scotland. It is a vital step towards preserving the long term future of the Grangemouth site and those businesses that depend upon its continued presence in Scotland.”

 

The government has been putting the case forward a unified Britain ahead of the referendum on independence on 18 September. 

 

Grangemouth is the latest project to be supported by the government’s loan guarantee scheme, which chancellor George Osborne said “is only possible because of the credibility of the UK government’s balance sheet”.

 

Ineos Group, which operates worldwide, yesterday reported second quarter earnings of €447m (£353.6m), up from €365m a year ago. 

 

Its European unit saw earnings double year-on-year to €79m.

 

Global petrochemicals group Ineos is a little bit of a mystery. 

 

Despite turning over $43bn (£25.1bn) in 2011, it hasn’t gone public. It is still majority-owned by its billionaire founder James Arthur “Jim” Ratcliffe, who started the company in 1998. 

 

It now has 51 manufacturing sites in 11 countries, but it only really shot into the UK’s public consciousness last year due to a stand-off with union Unite over the Grangemouth oil refinery it owns in Scotland. 

 

Unite’s members went on strike in protest against the pay and pension reforms that Ineos argued were needed to prevent the refinery’s closure. 

 

Ineos won and the vast majority of Grangemouth’s 800 employees managed to keep their jobs. 

 

Ratcliffe, estimated to be one of Britain’s richest men, was at the centre of the dispute. 

 

He started his career at Exxon Chemicals. Then in 1992 he led the successful buyout of Inspec Group, which he left in 1998 to lead the acquisition of Ineos from Inspec.

 

He relocated Ineos’ head office from Hampshire to Rolle in Switzerland in 2010, to save the company £100m a year in tax.

 

In March of this year Ratcliffe, a keen marathon runner, donated £1.5m to start a charity promoting exercise among primary school children. At the time, Ineos revealed that Ratcliffe had trekked to the North and South Poles with both of his sons. 

 

Low-profile he may be, but frugal he isn’t. Ratcliffe is said to own two super yachts called Hampshire and Hampshire II.