Financial News

  • 18 July 2014, 9:25

Shale Gas Terminal 'Saves' Grangemouth

The owners of the Grangemouth terminal, threatened with closure last year, say its future has been secured by a Goverment loan to help build a shale gas facility.

Ineos says the promise of £230m would allow it to raise funds to invest in a new terminal to import, store and process ethane from shale gas as North Sea supplies dwindle.

The company said it was one of the most important infrastructure projects of recent times in Scotland and would protect thousands of jobs across the UK by ensuring the long-term future of petrochemical manufacture at Grangemouth.

The ethane tank will be the largest in Europe and is central to the company's plans to import shale gas from the US - a product that has helped bring down world gas prices but is controversial because of the use of a process called fracking to extract it.

The prospect of UK-based fracking has faced stiff opposition from environment campaign groups and communities, though ministers argue it is needed to bring prices down and boost gas supplies.

Under its plans, Grangemouth will, by 2016, be a shale gas-based facility, which Ineos said was essential if it is to compete in world markets beyond 2017.

The future of the site was in doubt last year because of an industrial dispute, but Ineos said it had invested £300m as part of a long-term survival plan.

Chief Secretary to the Treasury Danny Alexander said: "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.

"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."

Ineos chief finance officer Gerry Hepburn said: "The news that the UK government is supporting our plans to build an ethane import and storage facility at Grangemouth with a loan guarantee is a critical element to ensure the long-term future of the site.

"We will use the loan guarantee to raise funds through a public bond issue.

"The proceeds of the bond will be used to fund the ethane tank project at Grangemouth.

"It will be very rewarding to see the renewal of the site starting to take shape as we begin construction work."

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