Sir Keir Starmer, speaking at the Scottish Labour conference on Sunday, said the cash would come from the National Wealth Fund for an "investment in Scotland's industrial future".
Sir Keir said: "We will grasp the opportunities at Grangemouth, work alongside partners to develop viable proposals, team up with business to get new industries off the ground and to attract private investors into the partnership we need.
As well as the investment in Grangemouth's future, Sir Keir said every person made redundant will get 18 months full pay and a skills and training offer "backed up with up to £10m".
The company said the decision would "safeguard fuel supply for Scotland" by converting the site into a terminal able to import petrol, diesel, aviation fuel and kerosene into Scotland.
Sir Keir said the new investment will be a partnership with the private sector, and he is expecting three times the amount the government is putting in to come from private investors.
