Ineos has announced that at least the chemical production units at its Grangemouth complex will not reopen after being shuttered on 15 October in the midst of a labor dispute with the Scottish trade union Unite. The now Swiss-based group's shareholders took the decision on Oct. 22 and informed workers on Oct. 23 that it planned to appoint a liquidator for the business within a week.

As many as 1,400 jobs could be lost, depending on whether the refinery remains closed, and the knock-on effects for the rest of the UK economy could be severe, reports suggest.

At the site acquired in 2005 with the BP derivatives business, Ineos operates a refinery - in a 50.1 majority joint venture with PetroChina - capable of handling 210,000 barrels a day. It supplies most of the Scotland's fuel as well as BP's Kinneil oil terminal, which processes North Sea gas coming ashore through the oil multinational's Forties Pipeline System.

Grangemouth also has with two crackers believed to have capacity for more than 1m t/y of ethylene and nearly 400,000 t of propylene. Downstream, Ineos operates a plant for 330,000 t/y of LLDPE and a plant for 285,000 t/y of PP.

UK officials said they had information that Ineos was prepared to restart the refinery, depending on guarantees from the workforce not to engage in industrial action. Group chairman Jim Ratcliffe had repeatedly threatened to close the entire site if employees did not agree to a wage freeze and pension cuts.

After Unite called off a planned 48-hour strike even amidst the breakdown of talks with Ineos management, employees were asked to vote on a survival plan for the site. At least 665 of the union's 1,023 members who voted are believed to have rejected the offer on Oct. 21, most of them production workers.

"This is a hugely sad day for everyone at Grangemouth," said Calum MacLean, chairman of Ineos Grangemouth Petrochemicals. "We have tried our hardest to convince employees of the need for change, but unsuccessfully." The group has repeatedly insisted that the site is losing £150 million a year and needs £300 million of investment to finance a terminal to import shale gas-derived ethane from the US.

Although Ratcliffe acknowledged recently that Ineos had applied to the UK government for aid in financing a terminal, but the decision to close came almost simultaneously with the news that Grangemouth had prequalified for assistance under the government's £40 million taxpayer-based funding scheme for major infrastructure projects.

UK energy secretary Ed Davey, saying he was "saddened to learn of Ineos' closure plans, called it "regrettable that both parties have not managed to negotiate a fair and equitable settlement that delivers a viable business model."

Grahame Smith, general secretary of the Scottish Trades Union Congress, said Ineos' behavior "reveals the true nature of a feral private equity concern that clearly believes it has no social obligations whatsoever."

UK authorities appeared to be holding onto a sliver of hope that the final word on Grangemouth has not been spoken. The Scottish regional government said it planned to make "one further attempt" to save the petrochemical plants or seek a buyer for the site.

"We cannot accept the removal of Grangemouth from Scotland's industrial infrastructure," said first minister Alex Salmond. While most industry analysts gave the undertaking little chance of succeeding, some said Ineos might want to hold onto the site for a while to see whether the ethane terminal could be realized.

The refining and petrochemicals sector, crucial to the Scottish economy, accounts for nearly 25% of the UK's exports of manufactured goods according to estimates. The demise of Grangemouth would be a major blow to the September 2014 Scottish referendum on independence from the UK, as observers said voters are most concerned about how a separation would affect the economy.