I understand that there are statements on the Whiddy project. These statements will be made under Standing Order No. 38.
Whiddy Oil Terminal: Statements.
As is obvious from the media reports during the past 24 hours, I was pleased to be able to announce last evening that the Whiddy terminal is being restored at an early date. The estimated project cost is $60 million. I am informed by Gulf Oil that there will be an estimated 250 jobs in the construction phase and that the bulk of these will be available to Irish people.
I arranged for copies of my media statement to be made available in the Library of the Oireachtas promptly at time of issue. I am happy, however, to avail myself of the opportunity to summarise the details of the package here in the House.
It is known that there have been protracted negotiations with Gulf Oil over a period of several years on this question. I saw it as an important priority to bring those negotiations to an early conclusion and I think I can justifiably claim that this has now been achieved with considerable success. There are a number of ingredients in the package and I propose to mention them briefly.
The jetty will be rebuilt to handle tankers from 30,000 tonnes up to 275,000 tonnes. The original jetty could take tankers up to about 350,000 tonnes but I am advised and accept that there is not now much demand for that type of facility. As I mentioned already, this project is estimated to cost $60 million.
The facilities of the terminal will be upgraded to handle petroleum products as distinct from crude oil. Gulf have given a commitment to upgrade for middle distillates, mainly gas oil diesel and kerosene, at a cost of $2 million to $3 million. They will also include petrol provided this can be done safely and that the cost is not exhorbitant relative to the cost of the rest of the project.
Gulf will provide strategic stocks at a minimum level of 160,000 barrels. They will increase this at a rate of 80,000 barrels for each tank beyond the first two brought into active service. Members will be aware that there are 12 tanks in all. Two tanks of a total capacity of 1.17 million barrels will be at the disposal of the State free of storage charges indefinitely. There is a commitment that any oil which is in the terminal when an emergency is declared and which is owned by Gulf or any of its affiliates may, at the option of the Minister for Energy of the day, be included in the strategic reserves of the State. Furthermore — and this is a very important point — if any of these strategic reserves have to be drawn down they will be paid for at defined pre-crisis prices. There was no such provision in the former agreement on strategic stocks and there was in fact a very real possibility that stocks drawn down would have to be paid for at crisis prices. This would be effectively little better than having to buy on the open market at crisis prices.
I know that I am open to the charge that I gave away the existing one million barrels stocks. The clear advice available to me is that there had been grave doubts as to whether that arrangement was enforceable since 1979 in the context of an unoperational terminal. A one million barrel commitment is not a particularly onerous burden in a terminal which is operating at a high throughput but in the situation which has existed for the past six years it was a very heavy burden indeed. The original arrangement was for one seventh of the terminal. After the 160,000 barrel minimum the new arrangement is pro rata, in that it gives one-seventh of each tank in use. When taken in the context of the wider features of the package I think this has to be seen as a reasonable and business-like approach.
The oil existing at present in the terminal is being offered to the State at a discount. If, for whatever reason — and there are some related to quality — the oil itself is unattractive to the State, then there will be a prompt payment of $1 million dollars in lieu of the discount. The arrangement includes provision for an additional unconditional payment of $1 million to the State.
The terminal will be brought into interim operation at an early date if technically safe and feasible. The target date for completion of the project is end of 1986 and the project will be subjected to rigorous examination from the point of view of safety, bearing in mind the findings of the Costello tribunal and the current "state-of-the-art" internationally. In other words, it will be to the highest standards and will be vetted in accordance with dangerous substances regulations, oil jetty regulations, fire safety and environmental aspects.
Gulf have given me a commitment that they will employ Irish citizens and use Irish goods where feasible in the project. I particularly welcomed this policy statement from them.
I want to briefly mention a few other points. When the terminal is back in operation Gulf will be increasing their own workforce and the usual service jobs will come back into place giving a total of about 100 permanent jobs. Lest I mislead the House and the people of the locality I want to make it clear that this number includes the existing 38 employees on Gulf's payroll. Gulf have been taken over internationally by Chevron, possibly subject to the ironing out of a few details in relation to their joint operation within the United States, and performance under this deal is being guaranteed by Chevron. I acknowledge that there is litigation pending in the UK High Court between Gulf and other parties arising from the Betelgeuese accident and I want to say that this deal stands independent of that litigation.
I have already been asked two questions outside the House which I wish to deal with briefly. There is no cost to the State arising out of this package and there is no offset under any other policy area.
Finally, preliminary indications available to me indicate that, subject to satisfaction on the question of safety and the environment which I have dealt with earlier, the announcement has been generally welcomed in the part of the country directly concerned, that is, Bantry and its surrounds.
Full utilisation of the facilities at Whiddy has always been supported by me and by Fianna Fáil in general. Since the unfortunate accident there in January 1979 I have made many demands for the reconstruction of the jetty. Irrespective of whether the Government or an international organisation carry out the work, we support in principle the need to have the facility fully operational. I welcome the job creation potential both in terms of the construction work and of a permanent operating staff. We welcome this aspect particularly for the Cork area which we know only too well has been decimated by the actions of the Government.
However, I must be sceptical of the projected completion date and of the estimated cost having regard to the inevitable delays that will be encountered in respect of the redesign and planning application. We are putting the Minister on notice that we will insist on the closest scrutiny of the safety factors to be incorporated in the new design. We will be demanding that the recommendations of the Costello tribunal report, which at the time of its publication was the subject of international tributes, are strictly complied with. I am conscious of the fact that the Government are waiving the existing legal obligations of the Gulf Oil people in relation to restoring the terminal to its original state. A new situation is thereby being created.
I am puzzled, to say the least, that the Minister can point with confidence to an expenditure of $60 million having regard to all the unknown factors involved in the new design, in planning permission and to all the delays that are inevitable. I am sceptical also as to the projection that the work will be completed by the end of 1986.
The Deputy is a doubting Thomas.
Deputy Reynolds to continue without interruption from Deputy Sheehan.
Another JR.
One must be sceptical. This is a well hyped-up announcement. These are some of the areas in respect of which questions must be asked and answered before this matter is concluded. On behalf of this party, on behalf of the House and on behalf of the people in general I am requesting that the memorandum of understanding be put before the House and be made available in the Library and that the final agreement also be put before the House so that we can have full details of what is taking place.
It is a pity the Deputy did not take the steps we are taking when he had the opportunity.
I am very conscious of the bad record of the Department of Energy in the matter of memoranda of understanding. We all recall the memorandum of understanding that was drawn up by that Department in respect of the natural gas deal with Northern Ireland and with the British Government. During a period of 18 months we were all assured that everything would be in order, but that proved to be incorrect and finally we realised — though some of us knew all the time — the extent of the good relationship that existed between our Government and the British Government.
The details of the memorandum of understanding and of the final agreement must be exposed fully in order to ensure that the nation's strategic oil reserves are protected fully. There must be no back-room deals in this matter, deals of a kind that would jeopardise the country's access to emergency supplies. Again, I am putting the Minister on notice that we need an immediate answer as to what the position is to be in relation to our strategic reserves when this operation begins.
It is not good enough for the Minister to talk about a minimum of 160,000 barrels by way of strategic stocks, increasing by 80,000 barrels per tank beyond the first two when the project is in operation. The Minister then told us something we knew already, that there are 12 tanks there. There are one million barrels of oil there at the moment. That forms part of our strategic national reserve, but what is to happen when the reconstruction work begins? Are these stocks to be moved out in advance and, if so, what guarantee can the Government give the country that our reserves are stocked elsewhere? It is not good enough to come here with a confusing statement about 160,000 barrels with an increase of 80,000 barrels per tank. We do not know when that situation will come into existence but we must know where the one million barrels are to be placed. In saying that he would probably be accused of giving the stocks away, the Minister left himself open to just that accusation.
To turn now to a broader question, that is, the timing of this announcement, as we are only too well aware, negotiations in this matter have been going on for a considerable amount of time with the Gulf-Chevron Corporation involving Atlantic Resources and Union Oil. Is there a direct connection between the deal being worked out now and one that is perhaps half baked but which may be ready for presentation during the Christmas recess? That is a logical question when one has regard to the oversupply situation in the world so far as oil is concerned. One is led to be suspicious and apprehensive of the Gulf-Chevron Group. Not long ago Chevron purchased Gulf for $13 billion. We must ask why they should be so forthcoming at this point in engaging in expenditure which one of their representatives said on "Morning Ireland" today is not essential to their operations.
It is a question of good negotiations.
Is there a direct connection? We are aware that discussions are taking place on an early production system for the oil that has been found by the same group in the Celtic Sea. We must have regard also the fixed taxation terms which the Minister of State at the Department of Energy said two or three weeks ago would be available in a week or two from then. So far these have not materialised. We fix our taxation terms and put them on the table. Why is this one coming now and no sign of the other? Will we hear about it after the Christmas recess or during the Christmas recess or can we have a guarantee that all the relevant factors and all the information will be out on the table? In view of what I have said is there a quid pro quo in this situation with regard to the companies concerned? What will be the position down there when this operation is rebuilt? Will there be a proper port authority for Bantry?
(Interruptions.)
We are only too well aware of the huge cost in human lives as a result of the serious accident which took place there. The real situation was that the Gulf Oil people were their own port authority.
(Interruptions.)
We want to see a proper port authority which will ensure that the recommendations of the Costello tribunal inquiry will be implemented. We got it wrong before, it is time you got it right.
(Interruptions.)
We do not want a repetition of the last accident which took place.
Deputy Sheehan, please!
(Interruptions.)
I am overjoyed with the news.
Contain your joy, Deputy.
(Interruptions.)
I know that Deputy Sheehan would not be in the least interested if the oil terms and taxation terms were waived in order to get badly needed employment in Cork, but what price is being paid for this? Is there a quid pro quo? Has a deal been done in the back-room? We welcome the whole operation in principle but the Minister was far from forthcoming in his statement. The oil is being offered to the Government at a discount price of $2 million. About two or three years ago that oil was on offer for a much larger discount. I am always sceptical about the carrot being offered, the carrot being the sprat to catch the salmon. With my knowledge of the operation there I feel that this offer does not add up. This oil terminal was put on offer to me at the end of my short term as Minister for Industry and Energy for a nil figure. I was not prepared to take it because I felt the Gulf Oil people were getting out from under their existing obligations far too lightly. If they had offered me a contribution of £15 to £20 million dollars I was prepared to consider it. In view of the known facts the discount is miserly. There is no reason why it should be so small. There is no reason in a hard business world for the Gulf people and the Chevron people to be so oncoming at a time when they do not have to spend the money, when operations do not demand this type of expenditure. We want answers to those questions. Has another deal been done? If so the people and the House should know about it.
Anyone concerned about the unemployment problem in Cork and elsewhere must welcome the project that has been announced by the Minister. It is a pleasure to be able to welcome the provision of new jobs. Far too often we are decrying the fact that jobs have been lost or have not been created. This project will provide badly needed jobs in the Cork area during its construction and during its operation.
I understand that this is a memorandum of understanding. What legal standing has this memorandum? Are Chevron in a position to back out of that agreement if they choose to do so as happened on a previous occasion with the natural gas deal with Northern Ireland? There is also a need to ensure that a port authority is established in the area. The Minister's statement did not refer to that at all. The Minister referred to the project being subject to rigorous examination bearing in mind the findings of the Costello tribunal. There is no specific commitment towards establishing a harbour authority before this project gets under way. There is no specific commitment as to how the recommendations of the Costello inquiry will be implemented. Apart from the construction of the project to the highest possible standards there is also the need to ensure maintenance to the highest possible safety and environmental standards once the project is in full operation.
It is obvious from what the Minister said that the provision of this storage capacity will be very useful from a strategic point of view but it will have little if any impact on our general energy requirements. We are importing in the region of £1,000 million worth of oil per annum at the moment and the cost is increasing. There is little prospect of significant industrial development here until we tackle the huge differential between our energy costs and those in the rest of Europe. The differential is something in the region of 10 to 15 per cent and we are on the wrong side of it. It is important that some steps be taken to free ourselves from our dependence for our oil supplies on the multi-nationals. There is an opportunity here for the Minister in his negotiations with Chevron to put pressure on them to join with the State in bringing ashore the oil from the Celtic Sea which is estimated to run at the rate of around 10,000 barrels per day. This in multinational terms is small but in terms of its effects on our energy requirements it would be quite significant. It would presumably be necessary to upgrade the Whitegate oil refinery to take full advantage of that oil. There could also be a place for an additional refinery which would be expensive but which would have a significant impact on our long term industrial development. It must be obvious to most people that the sooner we can refine most of our oil the sooner we will be in a position to free ourselves from the stranglehold of the dollar on our industrial development.
I welcome the development but I would prefer to hear more specific commitments from the Minister regarding the establishment of a harbour authority, and special commitments in regard to maintenance, safety and conservation as legal requirements.
Deputy Sheehan rose.
Would you resume your seat? You are being disorderly.
Traditionally the Chair permits the asking of a direct question for information.
The Deputy is well aware that the Chair allows nominations from the Opposition parties to contribute and the matter is concluded when the final statement has been made.
Questions have been allowed.
I suggest you take advice.
I have no need to get advice from anyone. I have experience of statements being made in the House during the past two years. I am relying on Standing Order 38.
There is no need to fight about it. I am asking whether it is not a tradition that, though statements are not debated, a Member may ask for factual information.
I will allow one question.
Will the Minister place the memorandum of understanding before the House? There are matters in his necessarily abbreviated statement which are not quite clear. There are figures and so on involved.
The Deputy will appreciate that the memorandum of understanding contains many commercial details. I will reflect on it and come back to the Opposition spokesman on Energy.