The guarantee will enable Ineos and its granite-jawed founder Jim Ratcliffe to fulfil a long held ambition and finance the building of Europe’s largest ethane storage tank at Grangemouth.
The timing of the referendum and this announcement could be entirely random of course - as TV’s Francis Urqhart might say ‘I couldn’t possibly comment.’ But it seems equally plausible that this is another attempt by Westminster to persuade any floating Kilt-clad voters north of the border that it’s worth remaining part of the UK.
Those of you who remember the bad old days of the Battle of Grangemouth will recall that Radcliffe once threatened to close Grangemouth and direct future investment abroad. Regardless of the unemployment implications of such a move, Grangemouth’s refinery and processing plant are strategic assets, one of a dwindling number of European petrochemicals facilities which stand a chance of remaining competitive with US and Asian rivals. They are worth preserving.
So why does Ratcliffe want to build that ethane storage tank? Well, the competitive pressure that is driving other European bulk chemical processors to the wall is the cost of raw materials. Any plant that has to use feedstock derived from increasingly-expensive oil is at a huge disadvantage to one that can take its supply from much cheaper shale gas.
Grangemouth’s processing plant can run on ethane derived from shale gas imported from the US. Hence the need for that giant storage tank and import facility to go with it.
Ethane is important because it is the prime building block in the production of ethylene, one of the most widely used bulk chemicals in the world. Ethylene is a vital precursor in making a whole range of plastics including polyethylene (polythene), polystyrene and PVC, as well as being used in the production of detergents and even in the ripening of fruit.
So the investment that this loan guarantee will facilitate - which Ratcliffe has called ‘One of the most important projects in Scotland in recent times’ - will secure the future of Grangemouth by enabling it to run on cheap imported shale gas ethane.
Regardless of political shenanigans, this is clearly a result for Ineos, Scotland and indeed the rest of what is still for the time being at any rate ‘The Union’. So sometimes the right thing can happen, even if it’s not entirely clear that it happened for the right reasons. Isn’t politics wonderful?