No Fracking, no Independence, Ineos Tells Scotland
- “If I look at Scotland as an independent state, the North Sea is not what it was,” the Ineos CEO Ratcliffe said. At $50 a barrel, the North Sea oil and gas operations do not make much money, he added. “There is no investment going on, nobody wants to invest in the North Sea at $50 a barrel because it is an expensive base.”
As olefins and polyolefins giant Ineos prepares to welcome the landing of the first US shale gas-derived ethane imports to its Grangemouth complex in Scotland on Sept. 27, the Swiss-based group’s founder and chairman, Jim Ratcliffe, has again lashed out at the Scottish government for not ending its fracking moratorium.
The Swiss-based group has acquired multiple licenses from the UK government to carry out shale gas exploration in Scotland’s central belt and is applying for more, but is unable to employ them due to the moratorium imposed by the devolved government in Edinburgh. The moratorium is due to be reviewed at the end of this year following the conclusion of environmental studies.
Taking aim at one of the Scottish National Party’s (SNP) most cherished goals, Ratcliffe warned that Scotland will never be able to gain independence from the UK unless it embraces fracking. At the same time he accused First Minister Nicola Sturgeon (SNP) of hypocrisy by accepting the group’s decision to import shale gas from the US to feed the Grangemouth complex, which management from time to time has threatened to close.
“If I look at Scotland as an independent state, the North Sea is not what it was,” the Ineos principal said. At $50 a barrel, the North Sea oil and gas operations do not make much money, he added. “There is no investment going on, nobody wants to invest in the North Sea at $50 a barrel because it is an expensive base.”
An independent Scotland would need to have a profit-and-loss account that is in the black and not in the red, Ratcliffe continued, referring to figures published last month showing that Scotland spent £14l.8 billion more than it raised in 2015-16, compelling the government to raise taxes or cut public spending.
Thus far, the government has not reacted to any of the pleas to end the moratorium, but this has not deterred Ineos’ management from issuing fresh calls.
During an Ineos-sponsored trip to the Marcellus shale fields in the US states of Pennsylvania and Ohio – from where the import volumes are being shipped – Tom Crotty, Ineos’ director of corporate affairs, told European journalists that importing natural gas from the US to the UK and Europe “makes perfect geopolitical and commercial sense.”
In a separate talk in New York, Ratcliffe said that without Ineos’ shale gas imports, Grangemouth would be closed because there isn't enough gas in the North Sea to continue to operate the petrochemical site.
The US shale gas has saved 10,000 jobs in the area surrounded by the complex, he said. At the same time, the Ineos managers continue to stress that imports are only a short-term solution, and that exploitation of shale gas reserves on the UK’s own territory could supplement dwindling North Sea resources.
Meanwhile, the Ineos majority-owned refinery at Grangemouth has moved back into profit. A recent financial report shows that Petroineos Manufacturing Scotland, a joint venture between Ineos Investments (Jersey) and PetroChina International, generated a pretax profit of £11.65 million in the year to December 31, 2015. This follows a loss of £18.68 million in 2014. Sales also improved from £240.2 million in 2014 to £288.7 million in 2015.
Director Russell Mann said the refinery business still faces “significant challenges” due to the current economic climate; however, steps taken to reduce overheads “have paved the way to restoring sustained profitability and improving cash flow in the long term.” In 2015, refining margins were at their highest level since the height of the financial crisis in 2009, the director said.
At the height of the crisis, Ineos sold a 49.9% stake in the refinery to the Chinese company.