Cabinet Secretary for Finance and Sustainable Growth John Swinney
Statement on effects of industrial dispute at Grangemouth Oil Refinery
Scottish Parliament
Thursday, April 24, 2008
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I am grateful for the opportunity to provide Parliament with further information on the industrial action that is planned on Sunday and Monday at the INEOS refinery at Grangemouth.
The First Minister wrote to the Presiding Officer and the other party leaders on Sunday to outline the action being taken by the Government and our key partners.
It is not acceptable to the Scottish Government for this dispute to go unresolved. We urge INEOS and UNITE to make every effort to resolve their differences. We therefore hope this matter will be resolved by constructive - and urgent - dialogue.
To support the dialogue, the First Minister and I, at various stages over the last few days have encouraged management and Unions to take part in talks to resolve their disagreements. The Government has also taken the initiative of offering, to both parties, a constructive intervention to assist discussions between the management and the Unions.
We arranged for an independent pensions expert - Stewart Ritchie, President of the Faculty of Actuaries - to carry out a study to clarify the issues which are in dispute in relation to proposals for the future of the INEOS pension fund. As President of the Faculty of Actuaries, Stewart Ritchie is uniquely placed to provide the sort of independent and quality advice required to help the parties find a resolution to these issues.
That proposal has been made available to ACAS where both parties have been involved in talks and it remains on offer to help to resolve the issue.
With the possibility of industrial action taking place, INEOS initiated a process of shutting down the plant ahead of the planned action this weekend. This work started last Friday. Following the action, it will also take time for the plant to return to full production. As a result of agreements made at ACAS, we expect the resumption of fuel production should take place within a matter of days.
The strike has the potential to affect all sectors of Scottish society and economy. We are therefore taking this issue extremely seriously indeed. UK Ministers - with whom we are in regular contact - have powers in relation to continuity of fuel supplies under energy legislation. We are responsible for consequence management in Scotland.
Ministers first discussed the potential strike at a routine meeting of the Cabinet Sub-Committee on Emergencies, chaired by the Cabinet Secretary for Justice last Wednesday. Ministers have now met in the Emergency Committee eight times and will continue to meet as necessary.
We have activated the Scottish Government Emergency Room - and our wider contingency planning arrangements - to ensure that urgent and prudent actions are being taken at local and national levels - and across key sectors. That work is focussing on 3 main aspects:
- to assess the potential impact of any disruption to fuel production at the refinery
- to make every effort to source alternate fuel supplies in the event of the action going ahead
- to ensure that appropriate contingency arrangements are in place to mitigate any possible impact to key services and to people across Scotland
In terms of the potential consequences of a temporary loss of fuel production at Grangemouth, a great deal of work is in hand to manage existing stocks to meet demand. BP has distributed additional supplies to forecourts in advance of the proposed action. Work is also in hand to source alternate fuel stocks from elsewhere in the UK to continue to meet demand across Scotland.
We are confident that, with good will on all sides, there will be enough fuel to keep Scotland moving. There are ample supplies of fuel available in Scotland into May and we anticipate that stocks can be maintained.
One of the most important messages to give, however, is that people should not change their normal fuel buying patterns. We therefore urge the people of Scotland to be sensible and only to buy the fuel that they need. We encourage people to make the journeys they require to and to use public transport.
We will continue to monitor demand and work with fuel retailers to manage the situation. It would clearly be unacceptable if any retailer were to take advantage of the potential of localised fuel shortages and increase prices. I would call on all retailers to ensure that increased prices are avoided at all costs.
With regard to assessing the potential consequences of any temporary reduction in fuel supplies, a wide range of activity is underway:
- INEOS, BP, transport operators and others are working to ensure that we have provision of fuel supplies
- Scottish Ministers and Scottish Government officials are meeting regularly to liaise with the oil industry and with local responders to monitor the situation and consider the potential impacts of fuel disruption to key public services
- All of Scotland's eight Strategic Co-ordinating Groups - which comprise local emergency services , local authorities and other key groups - are considering the potential regional issues and contingency arrangements. These issues are being relayed back to Government through our Emergency Room, to ensure that our activity is driven not only nationally but also by the potential issues on the ground
- Scottish Government officials are also in direct contact with individual operators and agencies - for example with the transport industry - to ensure that issues are also considered across every part of Scottish life
As far as the upstream production is concerned, which will of course not affect consumer supply it has become clear during today that there may be an impact on the BP Kinneil plant, which controls the Forties Pipeline System. While this plant would be ready to operate soon after the end of the industrial action, there will still be the possibility of disruption to production which is currently 725,000 barrels of crude oil and 80 million cubic meters of gas per day.
This could place a substantial penalty on upstream production and could affect almost a third of oil producers in Scotland, none of whom are party to the current dispute between INEOS and UNITE.
Should any shortages arise, these local, regional and national arrangements are taking prudent contingency measures to prepare for potential scenarios. These measures will vary across areas and sectors, but will all focus on:
- maintaining essential services
- minimising any impact on the public
- ensuring that there is a speedy return to normality
Within this activity the Scottish Government will work to ensure that essential services operate as normal. We will ensure that any key supply issues for public transport, food deliveries and the emergency services are addressed.
While we hope this dispute can be settled to the satisfaction of all concerned, the Scottish Government will continue to take proactive and thorough contingency measures to secure fuel supplies and to prepare for the consequences of any action.
Parliament can be assured we are continuing to liaise with the UK Government, INEOS, BP and key responders, and are monitoring the situation very closely. Ministers and officials are meeting as required to monitor developments and provide a national overview and direction.
While the situation continues, the Scottish Government's Emergency Room will remain in operation to support the activity of Scottish Ministers and officials. It is also co-ordinating the detailed activity of the Government across the potentially affected areas and is responding to national issues raised by local responders.
We will, of course, keep Parliament updated on the situation as it develops.