Other Questions. - Mandatory Purchase of Petroleum Products.

Desmond J. O'Malley

Question:

18 Mr. O'Malley asked the Minister for Transport, Energy and Communications the effect on the price of petrol of the removal of the mandatory off-take of petroleum products from Whitegate Refinery. [3869/97]

In November 1996 I announced that the Government had decided, on security of supply grounds, that the mandatory purchase of petroleum products from the Whitegate Refinery would continue in modified form.

The effect of the modifications are: to reduce the purchase obligation from 35 per cent to 20 per cent, and to limit the additional income to the refinery arising from the mandatory regime to £3 million in 1997.

As a result of these modifications the impact of the mandatory regime on the consumer price of petrol is estimated to have reduced from 0.70p per litre in December 1996 to 0.15p since January 1997.

Eighty per cent of the refinery's capacity was being sold under the mandatory regime. Will the Minister clarify what the percentage is now? Further, could he explain why the Government decided not to remove the mandatory off-take obligation by 31 December as it had previously decided to do and as had been recommended by the Culliton report and the subsequent review of that report?

To answer the first part of the Deputy's question, 100 per cent of the produce of the refinery is now sold either at home or abroad, but the mandatory section of the off-take is reduced from 35 per cent to 20 per cent of what the companies sell within this country. The decision taken in the context of the Government's response to the Culliton and Moriarty reports that the mandatory regime should terminate at the end of 1996 was taken on the basis that the continuation of refining could be assured in open market conditions and that, therefore, the interests of security of oil supply could be maintained. However, international refining margins in Europe fell significantly in 1995 and continued to fall in 1996 making the immediate prospects for the refinery's continuation in operation extremely difficult. As a result, some corrective action was necessary to retain Whitegate's essential role in maintaining security of oil supplies. In other words, if we had removed the mandatory regime entirely at the end of 1996, the refinery would have closed.

Will the Minister of State equate that with the price per litre or gallon of petrol to see what difference it makes to the motorist buying petrol at the petrol pump?

I gave the Deputy that information in my original reply. The cost under the old regime for a litre of petrol was between .5p per litre to .7p per litre, depending on the produce. Under the new and modified regime, it has been reduced to 0.13p to 0.15p per litre.

What is the gross figure for the extra cost of petrol arising from this Government decision? Would it be as high as £10 million on motorists?

The total cost of the modified regime is capped and cannot exceed £3 million per year. That was part of the modified regime.