Chinese oil group could quit Ineos Scottish refinery

THE Chinese owner of the huge Grangemouth oil refinery in Scotland could quit its joint venture with billionaire Jim Ratcliffe after more than a decade, The Mail on Sunday understands.

City sources said Beijing’s largest oil and gas producer PetroChina is considering a sale of its stake in Petroineos, the oil trading and refining venture co-owned by Ratcliffe’s Ineos.

State-owned PetroChina linked up with Ineos in 2011 to create Petroineos, which owns Grangemouth and the Lavera refinery in France.

Petroineos boasts trading revenue in excess of $30billion (£23billion) and the two refineries process more than 420,000 barrels of crude oil per day.

The signing of the deal was witnessed by then Deputy Prime Minister Nick Clegg and Chinese counterpart Li Keqiang. At the time, the business had 1,000 employees and turnover of $15billion. A City source said PetroChina had hired advisers to examine options for its stake as part of a wider review of its assets.

The source said chemicals and manufacturing conglomerate Ineos was the most likely buyer if PetroChina pressed ahead with a sale. Ineos has owned Grangemouth since 2005.

A separate source said: ‘The hope [in the oil industry] is that they sell the stake to Ineos. In terms of buyers, it will be a pretty short list.’

The move comes as PetroChina aims to shift away from fossil fuels. It wants renewables to make up a third of its energy portfolio by 2030 and 50 per cent by 2050.

Refining has taken place at Grangemouth since 1919 and it provides most of Scotland’s fuel supplies, as well as the North of England and Northern Ireland.

But the industry was hit hard by the Covid outbreak when demand for oil slumped.

The last accounts for Petroineos Manufacturing Scotland, which only includes Grangemouth refining business, show the company suffered an £89.9million pre-tax loss in 2020, deeper than the £26.1million loss recorded a year earlier. Revenues fell by around £45million to £210million.

At the start of the pandemic, it was reported that Petroineos bosses asked the Scottish and UK governments for a loan worth hundreds of millions of pounds.

However, global demand for oil has since surged. Given the sharp fluctuations, it is not clear what the value of the stake could be.

Ineos and Petroineos declined to comment. PetroChina said it ‘does not comment on speculation’.