THE UK Government has been challenged over its decision to act as a guarantor for a petrochemical giant threatening job losses in Scotland while building a major new project in Belgium.

Project One will import import fracked gas from the US, to provide the ethane for a cracker plant in Antewerp that will produce ethylene, the building block of plastic.

It is being backed by UK Export Finance, which acts as a guarantor for the project.

But the Government’s backing for the project is the subject of a major controversy because Ineos, the firm behind Project One, also partly owns the Grangemouth oil refinery.

Grangemouth is home to Scotland’s last oil refinery, which has been threatened with closure in a move that could lead to the loss of 400 jobs.

In a letter to the Department for Business and Trade, Martyn Day, the MP for the area, asked the Secretary of State for Business and Trade Kemi Badenoch to explain the reasoning behind this decision “at a time of great uncertainty” for the Ineos’ site in Grangemouth.

He said: “Last week, Ineos announced that it was looking to close its ethanol plant at the Grangemouth petrochemicals complex by the first quarter of 2025.

READ MORE: Grangemouth oil refinery to close despite posting £100m profit

“The proposed closure is in response to a reduction in demand for ethanal in Europe along with increasing pressure from imports of ethanol from other regions, which has led the business at Grangemouth to run at a loss for several years.

“The proposed closure comes alongside plans to shut down the neighbouring Grangemouth refinery which is being converted into a fuel import terminal.

“In November Petroineos, a joint venture involving Ineos, announced the potential cessation of refining activities at the 150,000 barrels per day facility by 2025. This transition is anticipated to result in the loss of 400 out of the current 500 jobs at the refinery.

“During a government hearing held in December, the company stated that approximately 50 positions will be necessary for the decommissioning and demolition process over a span of three years.

READ MORE: UK Government snubs Grangemouth but pledges £600m to Belgian project

“I am therefore writing to enquire as to the reasoning behind the UK government’s decision to act as guarantor, at a cost of £600 million, for [the] Ineos Project One site in Belgium when the future of Grangemouth is so precarious?”

The Department for Business and Trade did not respond to a request for comment.