I propose to take Questions Nos. 44, 45, 47, 53, 56, 60, 63, 68, 78, 84, 88, 91, 243 and 247 together.
The market for oil is global and transparent. Adequacy of national oil stocks must be seen, therefore, in a worldwide context. A year ago conventional wisdom would have been that the withdrawal of Iraq's and Kuwait's oil production would have left the market in severe difficulty. In the event, the international oil market took this loss in its stride and scarcely faltered. OPEC and non-OPEC countries alike increased production to offset the loss. The new equilibrium in the market was helped, of course, by a reduction in demand in some larger countries. In OECD countries this winter's consumption is two million barrels a day less than projected.
The IEA in its statement on Monday this week summed up the position as follows.
The world market was well supplied with crude oil and oil products. The combination of relatively large stocks, weak demand and ample supplies left the market in good balance.
Inherent in some of the questions raised today and indeed in the media is the question: "What if all oil supplies were cut off?" That is a situation which is unlikely ever to arise. The great oil fields from Alaska to Venezeula, those of the USSR, and most of the Middle East oil fields have not been, and will not be, significantly affected by the conflict in the Gulf. The Gulf region supplies approximately 26 per cent of total world oil production. Even in the increasingly unlikely event that Iraq did manage to damage some of the very large Saudi installations further down the Gulf, the impact on overall world oil production would be just a relatively small reduction. Our crude oil supplies come mainly from the UK and Norweigan sectors of North Sea and are under no threat whatsoever. Our oil product imports are sourced in Europe. So, in respect of both crude oil and oil products, we are not faced with any direct threat to our oil supplies and are unlikely to be affected in any significant way if a minor shortfall emerged on the world market as a result of the Gulf War.
Should any such threat emerge the Government are well placed to protect our economic interests. Our stocks levels have never been higher than during the past number of months. If, for example, there were to be a 10 per cent shortfall in supplies in the future, then our 90 days of stocks would allow the continuation of normal levels of supply for many multiples of 90 days. Not only that but there are a wide range of measures available to me to effect demand restraint very quickly. In any event, we would also have the added comfort of being protected by our participation in IEA sharing arrangements should these be triggered off by any significant shortfall in oil supply here.
Our stocks are a long term safety net with which we can sustain the level of shortage which could be expected to arise if the situation in the Gulf worsened dramatically.
It has been stated that security would be enhanced if we had a government to government contract with an oil producer country and Nigeria has been referred to in this context. Such exclusivity could, in certain circumstances, pose serious risks for security of supply rather than enhance it. We had such contracts in the past albeit only on a medium-term basis notably in the early eighties with Iraq and the experience was not altogether a happy one. It was abandoned in a war situation.
With major changes in the pattern of the oil market, INPC, with the Minister's approval, changed to supply from North Sea, shorter term contract trading and to purchasing part of needs from the Rotterdam spot market. Now INPC are contracted for crude with Statoil the Norweigian State Company, but are free to buy part of their crude needs on the spot market. This reflects the pattern of a very large number of Europe's oil refining companies. My policy is to balance security with good commerciality by INPC. We are doing this.
There would not now be any greater virtue in a government to government deal, even if that were possible. There is certainly no need for it.
The oil companies continue to import most of their requirements in product form from the UK. That country is virtually self-sufficient in its oil needs. There is no reason their supplies should not continue and that is the view of the companies here to whom my Department's officials have spoken at top management level. Our security rests on this, on the stocks which are in place, and on an on-going refining capacity maintained, I might say, in the face of considerable criticism at the time and improved significantly since then by the INPC and with greater understanding and collaboration of the oil companies in recent years.
Details of national stocks, including stocks at Whitegate Refinery and in the form of crude at Whiddy, are being circulated for the information of the Members of the House. Let me state that the data which are being circulated now for information have been the subject of much discussion, speculation and distortion in recent weeks. This widespread confusion was totally unnecessary as all interested media and notably some of the commentators who were the source of this confusion about oil stocks, were invited by me, personally, to discuss the matter in detail with my Department and were facilitated in every way possible. I would hope that the information which I propose to issue today will be portrayed accurately to the public and that no further ráiméis will appear. The stocks tables circulated address the quantitative aspects of the questions now being taken. Since Thursday, 18 January, summary daily stocks data have been issued to the media by my Department and we are happy to provide this data to other interested parties on request.
In general, the supply situation remains most satisfactory. I have on previous occasions outlined to the Dáil the methods by which I ensured that national stock levels were increased since 2 August last year to meet, and indeed to exceed, EC and IEA stock requirements. The throughput at the national refinery was maximised in order to boost stocks of petrol and gas oil. Indeed, I ordered the reopening of Whiddy terminal and additional cargoes of crude oil were put in place there. In addition, major unused storage both in the private sector and that of the ESB was utilised to augment stocks of diesel and petrol.
I have taken additional measures to ensure our readiness for any supply difficulties that might be envisaged. I set up an interdepartmental consultancy and advisory group to allow direct and speedy exchange of information between the various organs of the State. I also established an operations group which includes the chief executives of the major oil companies, the INPC, CII, IFA and senior officials of my Department. This group will organise the smooth operation of oil supplies in any shortfall. I have received excellent co-operation from all sectors in that group. The oil industry representatives have assured me of the adequacy of oil supplies and are in full agreement with the stocks figures which I publish daily.
I would like also to assure the House that the European Commission and the International Energy Agency are in full agreement with our stocks figures and have verified that Ireland complies fully with their requirement. Indeed the methods used in formulating the returns to the European Community and the International Energy Agency by my Department are well known and have remained consistent since the stocks obligations were first introduced 15 years ago. There is, therefore, no question of double counting of stocks now or any time in the past.
Given the present favourable oil supply situation I am satisfied that an appropriate level of oil stocks are being held by this country. Besides the stocks which I have placed in Whiddy and elsewhere, the private sector also has a stockholding obligation to the State. In general these obligations are met. As part of the consideration paid by the Government to the then four owners of the Whitegate refinery, each one of these major companies were allowed to claim part of Whitegate stocks as part of their own obligation. The total of such stocks for the four companies is 170,000 tonnes as agreed by the Government.
