UPDATE 4-Scotland dodges blow as deal saves big refinery, plant
* Union agrees pay freeze, pension cut and no strikes
* Ineos to invest 300 million pounds
* UK government approves 125 mln pound loan guarantee
* Scotland to give 9 mln pound grant
LONDON, Oct 25 (Reuters) - Scotland dodged a heavy blow to its economy on Friday with a deal to rescue an oil refinery and petrochemical plant and safeguard up to 1,400 jobs.
Operator Ineos struck a deal with the Unite trade union to rescue the Grangemouth complex on the Firth of Forth, under which workers accepted a pay freeze and a cut in pension benefits and agreed not to strike for three years.
"Redundancies will be very limited. There's a future for this site, and it's long-term sustainable," Calum MacLean, chairman of Grangemouth UK, said at a news conference.
Ineos had previously said losses would force it to shut the petrochemical plant and could also threaten the future of the 210,000 barrel-per-day refinery, which provides around 70 percent of Scotland's fuel.
A Grangemouth closure would have damaged the governing Scottish National Party as it campaigns for independence from Britain ahead of a referendum in September next year. Many Scots have told pollsters that their biggest concern will be the likely impact a separation would have on the economy.
Ineos said shareholders would invest 300 million pounds ($485 million) in the site to cover losses and pay for a new terminal to import gas from the United States.
Ineos owns the refinery jointly with PetroChina, which holds a 49.9 percent stake. Ineos owns 100 percent of the petrochemical plant.
"We've given the chemicals business another 15 to 20 years on the back of new raw materials, new contracts and significant investment," MacLean said.
Union members, among other concessions, agreed to give up a final-salary pension plan for a defined-contribution plan.
"Obviously today's news is tinged with sadness. Decent men and women are being asked to make sacrifices to hold onto their jobs, but the clear wish of our members is that we work with the company to implement its proposals," Pat Rafferty, Scottish secretary of Unite, said in a statement.
Ineos said it would hold a 45 to 60-day consultation period with employees, unions and independent contractors to work out terms and conditions under the new deal.
"This is a victory for common sense. Unite advised employees to reject change and (reject a) vote for closure," Ineos Group Chairman Jim Ratcliffe said.
The Scottish government has agreed to provide a 9 million pound grant to support Grangemouth, and the British government has given initial approval for a 125 million pound loan guarantee, Ineos said. The loan would contribute to shareholders' 300 million pound investment.
"A really important petrochemical plant will stay open, savings thousands of jobs, not just at that plant but in the supply chain," British Prime Minister David Cameron told the BBC.
A closure of the refinery, which provides power for a major oil pipeline, might also have reduced supplies of the major North Sea crude that underpins the Brent oil benchmark, used as a basis for setting oil prices around the world.
Europe's oil refining industry is under extreme pressure from lower-cost competitors in the United States, the Middle East and Asia, while regional demand has declined.
Such market pressures led to the closure of British refiner Coryton near London in 2012 after its parent company, Swiss-based Petroplus, filed for bankruptcy.
At Grangemouth, Unite had been in a dispute with Ineos for weeks over the dismissal of a union representative. The company halted operations at the two plants earlier this month and demanded a change in terms and conditions before it would restart them.
"Grangemouth is the powerhouse of the Scottish economy. It now has a fighting chance of upholding this crucial role into the future," Unite's Rafferty said.