BP has confirmed that it will be cancelling plans to build a new CHP plant at Grangemouth. The original intention was to construct a gas-fuelled combined heat and power development at Grangemouth's Kinneil oil terminal.

If the project had gone ahead, as many as 400 temporary jobs would have been created during the construction and initial commissioning stage.

BP said that it had signed an agreement in principle with Ineos, the refinery managers, to provide steam and power to the Kinneil oil site. 

Now BP will continue to supply liquefied petroleum gas and dry gas to Ineos.

A spokesperson for BP said that the company was reviewing how it could best use its finite funds for capital investment in a business environment that continued to be challenging. In the light of this, it had decided to pause the CHP project and instead had progressed with an alternative supply contract to BP for LPG and dry gas.

Kinneil oil terminal is located next to the petrochemical plant at Grangemouth. It processes crude that is sent via the Forties pipeline from the North Sea's oil platforms.

The original CHP proposals were given the go-ahead by the Scottish government last March.

A spokesperson for BP confirmed that the CHP project would have required substantial investment. He said that the decision would be in the best interests of the FPS, particularly in the light of the cost pressures and broader challenges that were facing the oil industry.

Combined heat and power is viewed as a bridging technology in the field of green energy, as it can be combined with underlying green power sources or used with fossil fuel sources. It effectively extracts twice the benefit from the fuel, using the otherwise wasted heat as well as the electricity.