Ineos Pauses Hull Chemical Plants over High Gas Costs
Ineos is halting production at three UK sites, citing gas prices twelve times higher than in the US, affecting up to 4,000 jobs.
Key points
- Ineos is pausing three Hull chemical sites due to UK gas prices being twelve times higher than in the US.
- Up to 4,000 jobs are affected, with workers kept on payroll while the company seeks cheaper US LNG imports.
- The company is requesting tariff protections from UK and EU governments to shield against cheaper Chinese competition.
Ineos has announced it will suspend operations at three major chemical facilities in Hull, citing unsustainable energy costs. The company stated that UK natural gas prices are now twelve times higher than those in the United States, making production economically unviable despite the plants' high efficiency.
According to BBC Business, the decision affects up to 4,000 jobs, including 1,000 direct employees and 3,000 in the supply chain. Ineos noted that while its sites have a significantly lower carbon footprint than competitors, the energy cost disparity prevents them from competing globally.
Economic Impact of Energy Costs
The affected sites produce essential raw materials for pharmaceuticals, cosmetics, and construction, including acetic acid and ethyl acetate. Sir Jim Ratcliffe, the company’s chairman, described the current energy policy as damaging to the industrial sector, arguing that the cost gap with Chinese competitors, who use coal-based processes, is insurmountable.
Ineos is currently seeking to import liquefied natural gas directly from the US to lower costs, a process that could take up to a year. Workers will remain on payroll during this interim period, while the company awaits either the new supply chain or a reduction in domestic gas prices.
Calls for Tariff Protections
The company is urging the UK and EU governments to implement tariff protections against Chinese imports. Ineos argues that without such measures, European producers will be undercut by cheaper foreign goods, further eroding the viability of domestic manufacturing.
This move follows recent public criticism by Ratcliffe of government policy on taxes and immigration. The Department for Business, Innovation, Science and Trade has been contacted for comment on the company’s requests for trade barriers.
Forward Look on Industrial Viability
Analysts indicate that reduced global oil and gas supplies have driven wholesale prices nearly double since July. The outcome of Ineos’s LNG procurement efforts and the government’s response to tariff requests will determine whether these plants can resume operations or if the suspension becomes permanent.
