Simon Coveney
Question:118 Mr. Coveney asked the Minister for Communications, Marine and Natural Resources if sufficient oil reserves are in place here in the event of a war on Iraq; and the measures he has taken to this effect. [6408/03]
Priority Questions. - Oil Reserves.
As a member of the International Energy Agency, IEA, Ireland is required to maintain emergency oil stocks equivalent to at least 90 days of net imports in the previous year. The EU imposes a similar requirement based on consumption. On 31 December 2002, the latest date for which comprehensive figures are available, Ireland's emergency oil reserves, whether held at home or in other EU member states, amounted to the equivalent of 123 days of net imports using the IEA methodology. The EU average is 115 days.
In the event of significant disruption to global oil supplies these reserves would be eked out over an extended period to supplement supplies that would be available in the normal course so as to provide cover far in excess of their nominal duration. For example, if there was a 10% reduction in world oil supplies, a level of disruption unprecedented over the past four decades, then our current reserves would last for more than 1,200 days – well over three years. They would last even longer if account were taken of the reduction in consumption that would be achieved by the demand restraint measures that would be triggered by a crisis of this magnitude.
The consensus view on the implications of an outbreak of war in Iraq is that while there would probably be a temporary rise in oil prices, there would be no significant adverse impact on global oil supplies. This view is underpinned by the declared intention of OPEC to increase production accordingly should any shortfall occur. This undertaking was repeated by OPEC's general secretary at an informal meeting of EU energy Ministers that I attended on 22 February. In these circumstances, it would be very difficult to justify making any special efforts at today's high oil prices to add to national oil reserves that are already at record high levels, and there are no proposals to do so.
There would be no question of Ireland or any other oil consuming country attempting to deal on its own with an interruption in oil supplies from the Gulf. If such a crisis were to occur, the response, including the release of emergency stocks and the identification of alternative sources of supply, would take place primarily within the framework of the formal emergency regime developed and maintained by the IEA. Under that regime, member states would be entitled to a share of available oil in the event of a reduction of at least 7% in normal global supply levels.
Additional informationThere are also provisions for a co-ordinated international response to an emerging crisis, without the oil-sharing component, in advance of the 7% trigger. It is widely considered that a measured response along these lines, rather than what could be construed as panic measures by individual member states, is the appropriate way to address current concerns about oil supplies from the Gulf. I am satisfied that Ireland's emergency stock levels are more than sufficient to ensure that we would be in a position to participate effectively in an internationally co-ordinated response in the unlikely event of oil supply disruptions as a result of developments in the Iraqi crisis.
It seems that we are on the brink of war in Iraq. Is it sensible for the Minister to attempt to predict oil availability and prices should that war go ahead?
While I accept that we may well have 123 days oil supply, how many days of this supply is held on this island or in the Republic of Ireland? What percentage of our oil stocks is not held on this island? Four oil tanks with a capacity of 600,000 barrels each currently lie empty at Whiddy Island oil terminal. Would it not be prudent to fill some of that capacity to ensure we have the necessary fall back position should a prolonged war in Iraq make this country vulnerable through difficulty in obtaining oil?
OPEC and Saudi Arabia have already publicly undertaken to increase oil production in the event of war. OPEC's secretary general confirmed this at the informal EU Council of Ministers meeting I attended a fortnight ago. When Ireland's position was compared to that of other countries at that meeting it was found to be one of the best. While Ireland holds 123 days oil supply, it is slightly misleading given that it assumes a 100% collapse in the market. Global oil supplies experienced an 11% shortfall during the Suez Crisis in 1956-57. At that time countries were required to hold 90 days of stocks and that would have provided cover for 26 months. Oil supplies fell by 8.6% during the Iranian crisis in 1979 but stocks would have provided cover for 35 months.
Ireland's oil stocks are split into three parts. One-third is wholly owned by NORA, the agency with responsibility for looking after oil stocks. A further one-third is held by the industry and is regarded as being available to us if needed. The final one-third, known as ticketed stocks, is held outside this country. Even taking only those stocks available on the island we are well ahead. Every other country, apart from Germany, has recourse to this ticketed oil supply.
On a point of information, the Minister has misled the House. The Minister has said that excluding oil reserves held outside this country, the oil reserves on the island are well within the recommended limits. That is not the case; we hold 78 days of oil reserves on the island.
We hold 87 days worth.
I have in a reply that it is 78 days—
I will give the Deputy the breakdown. NORA holds 38 days of stocks, ticketed stocks will last 36 days and industry and consumer stocks run to 49 days. It is accepted that once we have those ticketed, as it is called, they are available to us. They are being held in storage tanks in another country on behalf of this country—
So they need to be shipped here—
—and they are being paid for by this country.
—and in the event of war that is hardly reliable transportation.
The Deputy has to declare his constituency interest.