Exxon Mobil (XOM) plans to close its Fife petrochemicals plant in Scotland and lay off 200 workers, citing difficult market conditions and U.K. environmental policy it said is “accelerating the exit of vital industries,” the Financial Times reported Tuesday.
“We considered various options to continue production and tested the market for a potential buyer, but the U.K.’s current economic and policy environment combined with market conditions, high supply costs and plant efficiency do not create a competitive future for the site,” the company said.
The closure highlights the challenges for a U.K. petrochemical industry that faces fierce competition from rivals in China and elsewhere flooding global markets with cheap imports; energy supporters also the government’s decision to raise windfall taxes on producers is accelerating the decline in the oil and gas sector as North Sea production falls.
The U.K. petrochemicals industry has been concerned by the omission of refineries and chemical plants from the government’s planned carbon border adjustment mechanism, which is set to take effect in 2027, and Exxon’s (XOM) U.K. head Paul Greenwood recently told a parliamentary hearing there was “an absolute catastrophe waiting to happen” in the U.K.’s refinery industry if carbon costs continued increasing for domestic producers but not for overseas competitors.