At the outset I wish to state we have no objection to the Bill. We are glad to see Nítrigin Éireann Teoranta involved in the development of natural gas in Cork. We are happy to welcome any legislative provisions that are necessary to develop that proposed involvement. However, there are several matters that are relevant to the position of Nítrigin Éireann Teoranta and to the fertiliser industry generally on which I should like to comment. I am disappointed the Minister failed to refer to them, particularly at this time.
His speech was quite short. The general purpose of the Bill is to do something that is of far-reaching importance. In the words of the chairman of NET, it is the outstanding development in the history of that company and it is the first practical usage of the off-shore resources we have been fortunate enough to find in the last few years.
While the Bill is only amending capital and borrowing figures it is of great significance. It is very unfortunate that a Bill of this kind, that gives us the first opportunity to discuss the usage of natural gas that was discovered in this country three years ago, should be guillotined and that the Second Stage debate will be confined to one hour. As the Minister made a very short speech I have no doubt I will be able to confine my remarks to less than an hour but numerous other Deputies are interested in this matter also. Unfortunately they will not get the opportunity to discuss it and to ask questions.
I suggest at this stage, before we start this debate, that the Government consider lifting the guillotine imposed on this Bill which is very important and non-controversial. This would enable it to be discussed properly and would allow four or five Deputies, who to my knowledge have expressed an interest, to contribute to this debate by asking a number of questions. It is only in this debate that we will get any information on these matters. Unfortunately, we find it very difficult to get information in relation to many of these things outside a debate such as this.
One of the reasons why we welcome this Bill is that it gives a prospect to the Irish farmer of obtaining important basic fertilisers in a few years' time at a reasonable price. In the past two years the price of Irish manufactured fertilisers has increased by approximately 250 per cent on average. One of the results is that in the latter part of 1974 and the early part of 1975, the usage of Irish fertilisers dropped by about 40 per cent. This is a very serious situation not just for NET as a company, Gouldings and Albatros, but it is a serious national problem because our agricultural output is bound to fall as a result of the under-usage of fertiliser. The under-usage of fertilisers by Irish farmers over the past year or so is attributable, they say, exclusively to the fact that the price of what NET Gouldings and Albatros are producing has gone sky high and it is impossible for the farmers to afford the necessary investment to put adequate quantities of fertiliser on their lands.
The long-term problems that will cause are serious and are adverted to in the annual report of NET. We were very fortunate last year that in spite of the drop of hay and silage, the 1974-75 winter was extremely mild and a large number of cattle who would otherwise not have been able to do so got through that winter.
The growing season in 1975 has been unfavourable so far. There has been an abnormally long period of extremely dry weather. The silage and hay crops which have been saved this year are well down on the average yield farmers have come to expect over recent years. Many farms which were providing two silage crops in the summer have been lucky to get one fairly light crop this year. In many cases, hay fields in traditional meadows were down by as much as 50 per cent on last year and earlier years.
One of the results of this is that if we get even a normal winter this year our farmers will face serious difficulties. Anything that could overcome that situation of extraordinarily dear Irish fertiliser is to be welcomed. If, as a result of the proposed development at Marino Point we get cheaper fertiliser, the sooner that factory is built and in production the better.
One of the things we have not been told, even though an announcement was made in the last week of the signing of an agreement between Marathon and the Irish Gas Board for the purchase of gas, is what the price being paid to Marathon is. It is impossible for anyone to make an estimate of what the likely cost of production by NET at Marino Point will be. The Gas Board may not want to state the price they will pay Marathon for the gas and there may be good reasons for that. They may have to deal with other people later on. Whatever price has been agreed between the Gas Board and NET should be disclosed to enable people to do the necessary calculations to try to work out the likely cost of the production of ammonia and urea.
NET and other Irish fertiliser manufacturers are complaining of a reduction of 40 per cent in the usage of Irish fertiliser. So far as one can judge there may not have been an overall reduction of 40 per cent in actual usage. At the moment there are fairly considerable imports of fertiliser of a type manufactured by NET, Gouldings and Albatros, coming from Portugal. This has benefited the farmers considerably. Of course, it causes problems for our manufacturers of fertilisers. The Minister and the Government, and all who talk about it, are in the classic dilemma that we either leave it alone and try to help the farmers, or do not leave it alone and try to help the workers and manufacturers of fertilisers.
I understand the Dumping Commission are urgently examining the question of these imports at the moment and that a report is expected shortly. I do not know what their findings will be. I had hoped that the Minister would have dealt more generally with the whole situation of the fertiliser industry here. He must be aware of the serious situation in which Gouldings, one of the largest, if not the largest, manufacturers of compounds and other fertilisers, find themselves in at present. There is a widespread belief—although I do not think it is officially confirmed as yet —that a large number of men will be laid off in the future by Gouldings.
One hopes that that might not be true, but I understand it is true, and it is only a question of what proportion of their work force will be laid off. Happily NET have not reached that situation yet, but I understand they have very heavy stocks and cannot guarantee that none of their employees will be declared redundant in the foreseeable future.
These are matters I would have wished the Minister to deal with because they are very relevant and pertinent to this Bill. It would have been important for the Minister to deal with these as there are considerable rumours circulating in Dublin in relation to at least one large manufacturer of fertilisers, other than NET. These rumours, if left uncontradicted, can only do harm. That is why even though he has not dealt with them in his opening speech, I hope that in his reply or in the course of this debate the Minister will deal with the situation which now exists in Gouldings.
Apart from the fact that Gouldings are a public company, without State participation, they are supposed to be in direct competition with NET, are very much involved in the same kind of market and are meeting the same kind of problems as NET. If Gouldings have problems and difficulties— and it is widely stated that they have —can the Minister give an assurance that NET is in a stronger position?
The annual report of NET was issued a week or two ago. Unfortunately, it does not make very happy reading. The loss sustained by NET for the 18 months to the 31st December, 1974, was fairly considerable— £691,000, as against a reasonable profit in the 12 month period ended June, 1973. So far as one knows the position has, if anything, deteriorated since the 31st December, 1974. The bank overdraft increased between June, 1973, and December, 1974, from £3 million to £8.5 million. The company seems to be very heavily borrowed and, at the same time, is carrying extremely heavy stocks at presumably considerable cost to itself in terms of interest.
Because of the serious situation for agriculture at the moment in relation to the usage of fertiliser, it is very important that the Minister make it clear at the earliest possible time—I suggest this debate is the ideal opportunity— what proposals the Government have for reducing the price of Irish fertilisers in order to encourage their use by farmers because, if farmers fail to use fertilisers again this year, as they did last year, the long-term effect will inevitably be very severe. On the other hand, I am sure many farmers at present using imported fertilisers want to know whether it will be possible to continue using them, whether there is a likelihood of dumping or a likelihood of duties being imposed on Portuguese imports at any rate.
The managing director of Nítrigin Éireann Teoranta has been appointed a director of the gas board by the Minister, the board temporarily set up as an ordinary company pending the establishment by legislation of the board as a statutory board. For that reason the involvement and interest in Nítrigin Éireann Teoranta in the natural gas development off Cork are very well established. I would like to know what provisions are being made by the gas board in regard to the design and construction of the pipeline necessary to bring the natural gas from the point on the coast where it is landed to the NET factory at Marino Point. This is a matter of considerable national importance because it is the belief of the ESB among others, that the necessary knowledge and technology and ability to design and build virtually all that pipeline are available here. In particular, they seem to be available among the engineering staff of the ESB who feel keenly the obvious desirability of using men like that, who may well be declared redundant because of the absence of growth in the demand for electricity, in a sphere which will be of tremendous benefit to the economy in years to come.
The proposed factory at Marino Point that Nítrigin Éireann have started to build is the only proposed usage, we know of, of Irish natural gas by industry as such. The alternative usage of the balance that will come from the field off Kinsale Head is being sold by the gas board to the ESB for conversion into electricity at a new station further north in Cork Harbour and also in the Marino Station in Cork city which is to be converted into burning natural gas rather than oil. The Nítrigin Éireann development at Marino Point is particularly welcome because it is recognised by those who are experts of natural gas throughout the world that the production of ammonia and urea from methane natural gas off Kinsale is a highly economic usage. It is almost equally unanimously agreed that the usage of natural gas as proposed by the ESB in converting it into electricity is a highly uneconomic usage.
I would say to the Minister that the should have in his capacity as Minister for Industry and Commerce very serious consultation with the Minister for Transport and Power about the advisability of having other industries of a chemical type, such as NET which is under discussion here now, established in and around Cork Harbour for the better utilisation of the natural gas off our south coast rather than allow its conversion into electricity at a conversion ratio which everybody agrees is ridiculously expensive particularly if there is any other alternative usage at all. The conversion ratio is somewhere in the region of 35 per cent which means that about 65 per cent of the value of the gas is lost. It goes up the chimney, or disappears. The conversion ratio of the gas into ammonia and urea is very, very much higher. I do not know what the percentage is, but the wastage factor is very low, perhaps as low as 10 per cent. Rather than let so much of the gas be wasted by conversion into electricity would the Minister consider endeavouring to secure at all costs the establishment in the vicinity of other smaller industries, not making the same products but making products that can be made from the natural gas so that, from a national point of view, we will get the maximum benefit from the gas we have been fortunate enough to find off our south cost?
Another factor that strikes me is that we are not told what the ultimate total capacity of this factory will be. We have at the moment off Kinsale Head a find of gas of 125,000,000 cubic feet a day approximately. By Irish standards this is substantial. By European or world standards it is a small or moderately sized find. Many of the gas fields in the North Sea and off the Dutch coast are four, five or six times bigger. I believe the find off Kinsale Head is too small to set up a liquefaction plant for the storage and transport of natural gas but, hopefully, this find by Marathon will not be the only economically commercial find of natural gas around our coast. Hopefully, more will be found in the general region in which it has been discovered already.
If this happens has the Minister or have NET any plans for the usage of what could possibly be three or four times as much gas becoming available within the next year or two or within a year or two of this particular find being brought ashore?
There is a suggestion that the Cork town gas or the municipal gas system would be converted to natural gas. I understand that the usage is not huge in Cork. Cork city is not likely to use a large proportion of the gas which would be found. There will be costs such as conversion and so on which may give rise to some problems. I had hoped that the Minister would have given some indication of forward planning for the use of the remainder of the gas in this particular field and for any future finds which we might be lucky enough, as a nation, to make in that general area or indeed on the west coast. Presumably the production of 435,000 tonnes per year of ammonia and 310,000 tonnes of urea will probably be enough to supply the Irish market for the 20 years or so that this well will be in existence. I wonder have NET or the Minister looked into the possibility of building a much larger factory with these commodities available for export. I am not altogether clear whether the entire manufacturing process will be carried out at Greenore Point or whether either the ammonia or urea or both will be transported to Arklow possibly for some further processing there. That is another matter which should be cleared up.
I am glad to hear the view of the Minister that all the heavy borrowing should hopefully be repaid by 1982. The bulk of it, as he described in his speech, is from the company's own resources including borrowings. From what I can read in the balance sheet I do not think the company have any resources other than what they got from Finance and what they have borrowed from banks already and short-term loans of one kind or another. I wonder whether this borrowing is to be made abroad or whether the money is to be raised domestically. If it is to be raised abroad at least this is a productive asset for which to borrow and it is not the type of borrowing that this Government have been going on with over the past six or 12 months to pay their current debts and to pay benefits of one kind or another. At least there is a likelihood of a return here.
I note that it is proposed that the IDA give a grant of £5 million towards this project. The NET projection of the likely number of jobs is 500, which makes the grant cost per job £10,000, which is expensive even by modern standards. The NET report for 1974 makes reference to the fact that NET, together with Ergas, are participating with the ELF group from France, the French National Petroleum Company, in a consortium to explore four blocks of our southern and western coasts. This is a matter which could be of tremendous significance to NET and it is a pity the Minister did not advert to that because many people would like to know precisely where NET stand in relation to it, what their percentage is going to be. The only information we got, in relation to the participation of NET, in the Minister's statement of 13th June in relation to the issue of licences to these various consortia is that the participation by NET would be on a carry basis, that is that no funds would have to be provided by the company until a commercial discovery is made. That statement goes on to say that the NET participation is subject to the approval of the Government. I presume the Government have approved of it. It would seem incredible that they would not, particularly when the participation is on a carry basis without any financial commitment until discovery. What is important is that the public are entitled to know, because NET, are in effect, a public semi-State company, what percentage NET are getting on a carry basis and what percentage Ergas are getting and what percentage the foreign interests would have and confirmation that the Government have approved NET's participation in the consortium.
If NET have to contribute towards the commerical development or exploitation of any finds which this consortium might be lucky enough to make the capital cost will be very considerable. I would like an indication from the Minister of where it is proposed to obtain that capital, whether the Minister for Finance will be putting it up or whether it is envisaged that NET, by that stage, will be able to put it up out of their own resources without any assistance from the Exchequer or from the Minister for Finance. It is important that the country should know that.
At the moment it is clear that NET are not in a position to contribute to anything no matter how modest because their financial affairs are far from good due to the happenings of the last year or so. Perhaps it is proposed that NET should be able to make a sufficient profit out of the new project at Marino Point to be able to pump large amounts of capital into the consortium in which they will be taking part for offshore development. I am limited in what I can say about this because unfortunately we got no information from the Minister tonight on that very important aspect of NET's proposed activities in the future. They are matters which I think should be dealt with fully. I know there are other Deputies who are at least as interested as I am in them and in having answered the sort of questions which I have been asking. This measure is totally non-commercial. We will not vote against it. We do not even seek to make any amendments to it. We would be perfectly happy to let it go through in a reasonable period. In these circumstances I would ask the Minister to act equally reasonably and to allow a reasonably full discussion on the many important points that arise in connection with the future of NET, of natural gas development and the utilisation of oil in respect of which they have been fortunate enough to get a share in a mainly foreign consortium.
