- 18:38, 16 MAR 2017
- UPDATED18:40, 16 MAR 2017
Billionaire boss of petrochemical giant Ineos Jim Ratcliffe has the pipelines which bring North Sea oil and gas ashore within his grasp, the Daily Record can reveal.
The owner of the Grangemouth Refinery is in talks with oil giant BP to buy the Forties Pipeline System (FPS) which would give him control over potentially more than one million barrels a day from offshore fields.
Fury erupted last night (Thurs) at the prospect of fracking supporter Ratcliffe, with his history of bad industrial relations, seizing the reins of such a strategic network.
Ratcliffe has been the driving force behind bringing the shale gas industry – onshore drilling known as fracking – to Scotland but has so far been thwarted by a Scottish Government ban.
One shocked oil industry source who fears putting the pipelines in Ratcliffe’s control said: “Holy sh*t. This would be like giving a monkey a machete.
“Letting Jim Ratcliffe loose on all the operators who feed into that pipeline is a dangerous, dangerous ploy.
“He could at a stroke just cull that whole region with ownership of that pipeline by increasing tariffs. Oil operators pay tariffs to put their product into the pipeline.
“If he were to start messing companies about with increased tariffs and everything else it could make their operations uneconomical.”
Another source said: “Ratcliffe already has one major bit of national infrastructure in his hands which he threatened to close in 2015, now he’s going to get another if this deal goes ahead – and that’s a concern.”
Last night both BP and Ineos confirmed to the Record that they were in discussions “regarding a potential sale”.
BP owns all of the Forties pipeline system and the oil that flows through the system is critical in setting the price of Dated Brent, an international crude benchmark.
Ratcliffe is notorious for the tough line he took in 2013 with workers at Grangemouth, Scotland’s biggest industrial site.
After a dispute over the suspension of a shop steward, he closed the plant and vowed to walk away for good unless workers accepted major cuts to their pensions and conditions.
Last night a Government source moved to allay fears that Ratcliffe could hold the country to ransom by gaining control of the FPS.
The Whitehall insider said that such large deals can be referred to the UK government for review and if there were any serious risk to the UK infrastructure Ministers could intervene.
They pointed out: “The UK Oil and Gas Authority issue permits to operate the pipeline infrastructure and operators in the North Sea are obliged to comply with their policy of ‘maximum economic recovery’. If they do not the Authority can stop the permit and re-issue it to another operator.”
In effect, if Ineos were to “turn off the tap”, the Government could strip the company of its pipeline control and award it elsewhere.
The Government insider added: “Also, there are so many contracts with suppliers coming on and off the pipeline that the commercial consequences of a close down would be disastrous for an operator.”
However an industry insider said: “There’s still the spectre of someone like Ratcliffe who’s pushing the fracking agenda being able to cause problems by holding such control over a key element of our energy industry.
“Despite the safeguards, he could still make life difficult to bring pressure to bear on Government and who’s to say he couldn’t absorb any losses incurred during that time.”
And Scottish secretary of the Unite union Pat Rafferty said: “Our members at BP will have major concerns about the possibility of becoming employees of Ineos, a company with a clear history of attacking our members’ pensions, as well as their terms and conditions, in order to maximise profit.
“If a sale does go ahead, we will fight to protect our members in every way we can, and Ineos should work with us to allay their fears.”
But Rafferty also warned: ““There is also a wider issue of economic power. The Forties Pipeline System carries a massive amount of the UK’s oil.
“Grangemouth is the one of the country’s major refineries. Both of these pieces of vital national infrastructure could soon be effectively in the hands of one man. That is an incredible amount of power.
“It’s not so long ago that both Grangemouth and the Forties pipeline were owned by all of us, and operated by a nationalised British Petroleum with a responsibility to look at what was good for the country as a whole, not just what was good for a small group of wealthy individuals.”
Rafferty said: “We need a national debate now.
“Do our politicians believe in an economy where power is widely held and used for the benefit of us all, or are they happy with power in the hands of a tiny minority whose biggest concern is their own personal benefit?
“Is it right, or sensible, to give the power to turn off the taps – and bring the entire country to a standstill – to one private company, without any democratic involvement or oversight?
“Unite doesn’t believe that is good for workers or good for the country. Our members will be listening closely to the views of our governments both at Westminster and Holyrood.”
Last night BP confirmed talks were ongoing with Ineos.
A spokesman said: “BP can confirm it is in discussions with Ineos regarding a potential sale of the Forties Pipeline System.
“We remain committed to communicating openly with staff and our stakeholders as soon as we are able, and as commercial confidentialities allow, if any deal is confirmed or agreed.”
An Ineos spokesman said: “At this stage I can confirm that we are in discussions with BP.
“At the moment the details of the conversation are unfortunately confidential and I cannot say very much more at this stage.
“As you know Ineos has been at the Grangemouth site since 2005 when we acquired it from BP so there’s been a natural linkage where we have taken raw materials from the Forties Pipeline System into the refinery and into our petrochemicals plant.
“But in terms of further information relating to discussion that we might be having with BP on Forties, I cannot go into any more detail.”
The pipeline was originally built to transport oil from the Forties field, discovered in 1970, to the Grangemouth refinery.
In the following decades additional discoveries were connected to the system. BP sold the Forties field to Apache and the refinery to Ineos Group AG while retaining control of the pipeline system.
While crude’s decline has made it more difficult for companies to sell oil fields, there has been demand for infrastructure related to the deposits.
Brent crude has dropped 56 per cent since 2014 forcing companies around the world to shrink and sell assets to protect their finances.