Swedish oil company Nynas has pulled the plug on its under-performing Dundee refinery operation in a move that could see 26 jobs axed.
The company confirmed it was shutting its crude plant at the Port of Dundee in a move that puts an end to more than 80 years of oil refining tradition in the city.
A depot operation will remain at the site to allow Nynas to continue supplying its Scottish-based customers, but the overall workforce is set to be slashed to around 20.
Employees were informed of thedecision on Thursday and a 30-day consultation period over potential redundancies has now been entered into.
Nynas expressed regret at the situation but blamed the closure on asignificant weakening of demand for its high-specification bitumen products.
The firm said its annual output at peak in 2006 had been 280,000 tonnes, a figure that has since fallen to just 120,000 tonnes.
“It is with great reluctance that we have announced these plans, and we will do all we can to minimise difficulty to those employees affected,” Dundee site general manager Steven Lockhart said.
“We have informed all our staff, the union, and our customers and, from the new year, will enter a period ofconsultation for at least 30 days.”
The bitumen produced by Nynas has long been used by Scotland’s maintransport agencies for use in major road building contracts with recent projects including the flagship M74 extension, the M80 and the A90 upgrade.
Liquid fuel by-products from therefinery are also commonly used within the Scottish whisky sector to power production plants used in the distillation process.
Mr Lockhart said the decision tomothball the refinery had been takenfollowing a wider review of Nynasoperations in Britain which had identified an over capacity in production terms.
He stressed the decision to shut off the Dundee capacity would have no impact on its ability to serve its customers north of the border.
“Keeping the Dundee refinery for the small volume produced today is notviable as this requires high capital costs for inventory and investments,” Mr Lockhart said.
“We have free capacity in the Nynas refinery system to produce the volumes required for the Scottish market and this is more cost efficient.
“The proposed plan to convert the Dundee refinery into a depot is part of a larger initiative to secure Nynas’ position in the UK.
“Demand for bitumen products has fallen significantly across Europe over the last 10 years and the number of operators in the UK market has declined.
“However, for Nynas customers in the UK and Scotland the changes in Dundee will mean business as usual.”
Dundee City Council’s deputedevelopment convener said the closure decision was a severe blow.
“This news would be disappointing at any time of the year but for the workforce at Nynas to have to face this level of uncertainty in the week before Christmas is a real blow for them and their families.”
Heavy crude oil refined at Nynas has been sourced a from Venezuela for anumber of years and the tanker carrying the raw material for offload has been a regular sight at Dundee docks.
The Port of Dundee said it was aware of Nynas’s announcement but said it could not comment on the specifics of the situation.
A spokesman said: “We are aware of the announcement by Nynas today and as this is the subject of a consultation process, it would be inappropriate for us to comment.”
The decision to close the refinery also has an impact on the controversialproposal by Forth Energy to build a major biomass facility at the docks as the energyintensive Nynas plant had been lined up as potential major customer for thenew-build power plant.
The new smaller Nynas plant would still have an energy need but it would beconsiderably smaller than that required for a fully operational refinery plant.
A spokesman for Forth Energysaid it was still considering its options over the biomass scheme.
“Following Dundee City Council’s objection to our proposal for a renewable combined heat and power plant in the Port of Dundee, we are currently considering our position and will continue to take all factors into consideration when making any decisions.”