MacDonald Welcomes £230 Million INEOS Loan Guarantee
Thursday, 17 July 2014 14:38
Falkirk East MSP Angus MacDonald has welcomed confirmation that Grangemouth refinery owner INEOS is in receipt of a £230 million UK Government loan guarantee to build what will be the largest ethane storage tank in Europe.
The loan guarantee was agreed last year as part of a deal to end an industrial dispute after INEOS threatened to close the Grangemouth plant indefinitely unless its demands for pay and pension reforms were met as part of a wider “survival plan”.
INEOS said today the UK Government's loan guarantee will allow it “to raise the money necessary to build a new terminal to import and store ethane for Grangemouth as North Sea availability declines”.
The government loan guarantee will allow INEOS to raise the £230 million to fund the construction of the terminal by issuing a public bond to cover the build and set-up costs, which will give INEOS a facility to store and process ethane from shale gas.
Angus MacDonald MSP said: “This is welcome news for the Grangemouth petro-chemical plant, which will help retain the plant here in Grangemouth for hopefully decades to come, with of course the knock-on benefit to local industry and the Scottish economy as a whole.
“Coupled with the recent Regional Selective Assistance (RSA) awarded to INEOS by the Scottish Government the future looks bright for manufacturing in Grangemouth”.
INEOS chairman Jim Ratcliffe said: “Without doubt, this is one of the most important infrastructure projects of recent times in Scotland, with implications to be felt right across the UK, not only for employment but also for manufacturing in general.”
He added: “Our ability to import US shale gas underpins the future of manufacturing at Grangemouth and across many businesses in Scotland.
“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.”
Falkirk Council approved a planning application for the ethane storage facility in May, and INEOS has agreed contract terms with Germany-based TGE Gas Engineering for construction of the terminal.
Commenting on the loan guarantee, Chief Secretary to the Treasury, Danny Alexander, said: “Over £1 billion of infrastructure projects have now been brought forward as a result of the UK guarantees scheme and £36 billion 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.”
Luxembourg-based INEOS, who had acquired Grangemouth in 2006, had also outlined a survival plan last year which has included financial support from the Scottish and UK governments to build a new gas cracker facility to take advantage of cheaper US shale gas exports.
INEOS has warned unless pay and pension reforms were accepted by the plants 1,300 staff and funding terms were agreed, Grangemouth would be closed by 2017 at the latest.
The company had noted in a Q4 2012 trading update the closure of the Elgin gas field in the North Sea after a leak was discovered had “adversely impacted” full-year results for 2012 as the company had been forced to “utilise more expensive imported feedstocks for the gas cracker in Grangemouth, which impacted the results by Euro 45m for the full year”.
INEOS notes on its website its global revenues have grown by more than $10 billion since 2009, with 2011 sales totalling $43 billion.
Its UK operations represents 12.3 per cent of its global business, comprising 51 sites across 11 countries.
The company ended the 2012 year with net debt totalling Euro 6.2 billion (£5.2 billion).
INEOS now financial updates to registered users, with Q4 2012 being the last quarterly financial update reported publicly on the group's website.