Vol. 419 No. 1
10 Mr. Sherlock asked the Minister for Energy if he will outline the latest position on any proposals that the Government may be considering in regard to the future development of Whitegate Oil Refinery and the Whiddy storage depot; and if he will make a statement on the matter.
11 Mr. Allen asked the Minister for Energy if he will make a statement on the future of Whitegate and on the recent reports that negotiations are again taking place regarding the takeover of Whitegate Oil Refinery.
30 Mr. G. Mitchell asked the Minister for Energy if he will give details of his negotiations for the future use and upgrading of Whitegate and Whiddy.
82 Miss Flaherty asked the Minister for Energy whether he is currently having discussions with any third parties interested in the development of the Whitegate Oil Refinery and/or the Whiddy Oil Terminal.
89 Miss Flaherty asked the Minister for Energy whether there are active negotiations under way currently in relation to the future of the Whitegate Oil Refinery; and if he will be in a position to make an announcement about its future.
90 Mr. Barry asked the Minister for Energy if talks on the future of Whitegate Oil Refinery are completed; and if he will outline, (a) the levels of investment required to up-date the refinery and (b) the amount that will be contributed by the Government.
I propose to take Questions Nos. 10, 11, 30, 82, 89 and 90 together.
As part of the Government's policy every effort has been made to attract a suitable investor for the upgrade of Whitegate Oil Refinery. Discussions with prospective partners have been held for over two years with potential joint venture partners. Currently, officials of my Department, together with the Irish National Petroleum Corporation are discussing a specific proposal for the refinery. I am precluded for reasons of commercial confidentiality from giving details of these ongoing discussions. The approach would involve a joint venture and an upgrade.
The level of investment required to update the refinery would depend on the nature of the upgrade project chosen. I am unable, therefore, at present to estimate levels of investment or the Government contribution required. My objective is that product prices resulting from an upgrade would be competitive with free market import prices, and that the upgrade would give products meeting the future environmental standards.
Every effort is being made, in tandem with the upgrade of Whitegate and otherwise, to attract suitable investment which would enable reactivation of the Whiddy Oil Terminal.
No decisions have been taken to date on the future for either facility. I have stated before that full evaluation of any proposals for an upgrade or reactivation is essential to ensure the optimum overall benefit to the Irish consumer. Deputies will understand that a refinery upgrade involves complex and finely balanced decisions on technical and economic issues which encompass the three major elements of chosen feedstocks, the required product profile and the cost of the upgrade.
Would the Minister not accept that there is a considerable degree of frustration at this stage on the part of people like myself who have a constituency interest in one of the facilities and those in the Cork area because the problem in the Whitegate Oil Refinery has not been resolved? Would he not accept that his assertion that he is precluded from discussing the details because negotiations are underway is somewhat similar to the story we have been hearing for quite some time?
Yes, that is true, unfortunately, and I have indicated that it is not my intention as Minister to recommend to Government an arrangement which would not be in the best interests of this nation. I will not make any recommendation until a satisfactory proposal is negotiated which I feel would merit Government support and which would have the support of Members of this House. If I were to make a decision in this matter which was not in the best interests of the economy or the Exchequer, I could well understand there would be many people who would be very quick to seize on that.
Essentially the people in my constituency and in Cork are asking when we can realistically expect to see white smoke?
When a satisfactory proposal is agreed with an investing partner or with an investor of satisfactory standing to the Government.
Can the Minister give us an estimate?
Will the Minister say if those with whom discussions are underway at present are the same people as those to whom he referred more than a year ago in March 1991? Is the figure of the estimated cost of upgrading the Whitegate Oil Refinery still within the range of the £80 million to £350 million he talked about at that time? Do the current negotiations include reference to the Whiddy Oil Terminal? Finally, may I ask if the Minister is in the process of negotiation with national or international parties?
The discussions are commercially sensitive and it would not be helpful if I were to disclose too much detail in the House. The cost of upgrading can very greatly as the Deputy indicated — depending on the particular configuration one agrees to: one can agree to undertake a minor upgrading of the refinery at a lower cost or one can decide on a more complex upgrading which would give a wider range of products and allow for the processing of increased volumes. This is a matter that would have to be decided by the parties making the investment together with the Department. None of the discussions have reached that stage.
The only information I can give the House is that senior officials of my Department are constantly in touch with potential investors. Since I became Minister, a large number has indicated an interest. All facilities in my Department which are necessary to provide full information about Whitegate Oil Refinery have been made available by INPC and by officials of my Department, where appropriate. We have not concluded any final agreement with any of the interested parties who have come to talk to us about investing in the Whitegate Oil Refinery. We are continuing our discussions with companies who have expressed a serious interest and whom we believe to have a serious interest in the refinery. We will continue to do so until such time as we can reach a satisfactory financial arrangement. I will not make a recommendation to Government to accept a financial proposal which would not be in the best interests of the economy. We have a valuable national asset at Whitegate and on Whiddy Island and I will not preside over negotiations where they are given away for nothing to some speculative investor.
I thank the Minister for his reply. I share his view that these are valuable national assets but fraught with certain problems. Has the Minister built into the figures of any projected deal the cost of ending the compulsory uptake from the Whitegate Oil Refinery, or does he see that as an ongoing and separate decision?
An important part of the Programme for Government, agreed between the two parties in Government was that every effort should be made to seek an investor for Whitegate with the intention of eliminating the mandatory regime which, as the Deputy may know, is a diseconomy to consumers here. That is one of the basic reasons I am so anxious to reach a satisfactory outcome. The Deputy can be assured of my intentions in that regard.
Does the Minister agree that only four of the 12 storage tanks on Whiddy Island are in use for the purposes for which they were built; and the eight empty storage tanks could, I understand, be used for fish farming, particularly for turbot or possibly lobster? This is an environmentally friendly activity which would be welcomed by local people as opposed to its reopening as an oil storage terminal, which is not. Will the Minister give serious consideration to carrying out a survey on this possibility?
I do not know if the Deputy was ever on Whiddy Island and has seen these tanks——
I was and I have seen them.
If so, the Deputy should be aware that some experiments on fish farming were done but the venture was not a success. Somebody lost money on the venture and I do not know what the final outcome of that will be. I am sure those who are au fait with local affairs in the Bantry area will agree with me that that is not the way forward——
That is true.
We should seek to utilise this major oil storage facility for the purpose for which it was built. With that in mind I have initiated a major refurbishment of the facilities on Whiddy Island. When I became Minister this oil storage facility was lying idle. It is easy for the Deputy to say that eight tanks are empty but all the tanks were empty until I began to utilise some to store our vital national oil stocks. At present 205,000 tonnes of crude oil is held on Whiddy in compliance with our EC and other international obligations to maintain 90 days stocks of oil in the country. Whiddy Island is playing a vital part in ensuring that our national stocks are in compliance with out national agreement.
As Deputies, locally at any rate, will be aware, the terminal is being maintained on a care and maintenance basis by the INPC subsidiary, Bantry Terminal Limited. In addition, extensive refurbishment work costing £1.88 million has been carried out over the past year and is still in progress. The European Community has agreed to fund approximately half of the cost of this work. I am sure the House will agree that this refurbishment work will make the facility more attractive to a potential investor.
Will the Minister clarify the aspect of his reply dealing with current discussions? Are the discussions presently underway simply exploratory discussions with people who have expressed an interest or are they serious negotiations that may lead to an agreement?
We have been in serious discussions with a potential investor over the past number of months. As I have already indicated, if it is not possible to reach agreement on a deal which is satisfactory to the State, then no agreement will be made.
Question No. 12 please.
