Financing secured to build Europe's largest ethane store in Grangemouth
- 17 July 2014
- From the section Tayside and Central Scotland
Grangemouth plant owner Ineos is to build Europe's largest ethane storage tank after receiving a £230m loan guarantee from the UK government.
It said this would allow the company to raise the money necessary to build a new import terminal and ethane store at the petrochemical facility.
Ineos chairman Jim Ratcliffe suggested it would benefit the whole of the UK.
"Without doubt, this is one of the most important infrastructure projects of recent times in Scotland," he said.
Mr Ratcliffe said the benefits would not only come in the form of "protecting thousands of jobs in Scotland and across the UK" but boosting manufacturing.
Planning permission had been granted for the £125m ethane store by Falkirk Council in May.
'Underpins the future'
A contract has now been signed with Germany-based TGE Gas Engineering to start construction of the terminal, which will store and process ethane from shale gas "as North Sea supplies dwindle".
"Our ability to import US shale gas underpins the future of manufacturing at Grangemouth and across many businesses in Scotland," said Mr Ratcliffe.
"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."
Ineos threatened to close the site in October after a dispute with the Unite union but decided to keep the site open after workers accepted changes to pay, pensions and terms and conditions.
It said it has invested more than £300m at its Grangemouth site as part of a long-term survival plan and that the new facility is central to the site's plans to import shale gas from the USA.
It views turning Grangemouth into a shale gas-based facility by 2016 as essential if it is to compete in world markets beyond 2017.
The loan guarantee enables it to raise financing on £230m through a public bond issue specifically to cover the building of the import facility and storage tank.
Chief Secretary to the Treasury Danny Alexander welcomed the company's plans.
"Over £1bn of infrastructure projects have now been brought forward as a result of the UK guarantees scheme and £36bn worth of projects are pre-qualified," he said.
"Our action is creating the right conditions for more investment in our infrastructure, helping to build a stronger economy and a fairer society across the country.
"The Grangemouth guarantee is fantastic news for Scotland's economic future and for the UK's energy security."
Scottish Finance Secretary John Swinney welcomed the announcement of the loan guarantee funding and the plans for new investment at Grangemouth.
"We are supporting these investment plans with £9m Regional Selective Assistance funding to secure the future of the Grangemouth facility and safeguard jobs in Scotland," he said.
"We remain committed to working with all partners involved to ensure a thriving, sustainable plant at Grangemouth, and the new import terminal and ethane storage facilities is a key step in securing the long-term future of the site."
Ineos owns two of Europe's four gas crackers - the other in Norway - that are capable of using US shale ethane gas feedstock.