Wednesday, 17 July 2013

Questions (33)

Micheál Martin


33. Deputy Micheál Martin asked the Minister for Communications, Energy and Natural Resources his views on the recent announcement that the Whitegate Oil Refinery is for sale; if he is satisfied that the National Oil Reserves Agency will not be affected by any sale; and if he will make a statement on the matter. [35057/13]

View answer

Written answers (Question to Communications)

Security of oil supply is central to the economy and to our economic and social development. While significant efforts are underway to improve energy efficiency and increase renewable energy, Ireland remains dependent to a large degree on imported oil. Oil comprised 59% of total final energy consumption in Ireland in 2011 and it is clear that oil will continue to play a pivotal role in the medium to longer term. Security of oil supply is therefore of central importance to the Irish economy and society and ensuring a robust oil infrastructure on the island is an essential part of our security of energy supply strategy.

Oil is either imported in the form of petroleum products or as crude oil. The crude that is imported into Ireland is refined in the Whitegate refinery. The refinery supplies about a quarter of the petroleum products on the domestic market. Some 75% of the Irish oil supplies are imported in final product form from neighbouring markets.

The Whitegate refinery was in state ownership for some years and was operated by Irish National Petroleum Corporation (INPC) who sold the refinery together with the Bantry Terminal in 2001 to a private company known as Tosco Corporation. Tosco subsequently sold on the refinery to Conoco Phillips and the day to day operation of the refinery and terminal is a matter for the current owners, Phillips 66. Under the terms of the sale from INPC to Tosco, the refinery and terminal must continue to be operated until 2016. This obligation applies also to Phillips 66 and any subsequent owners.

Phillips 66 recently confirmed that it commenced a process to market the Whitegate refinery, the storage terminal and the associated business. Phillips 66 has confirmed that it intends to continue operating the assets as usual during the marketing process which is expected to last for several months. My Department is maintaining close liaison with Phillips 66 in the context of the proposed disposal of the refinery. I can confirm that I attach importance to the availability of refining capacity in the State from a security of supply perspective.

More generally, discussions on the oil refining sector in Europe have been ongoing at EU and IEA level. In light of ongoing rationalisations in the EU refining sector and the expiry of Whitegate’s refining obligation in 2016, earlier this year the Government considered the strategic case for oil refining requirements on the island of Ireland. To inform its deliberations, the Government considered a report I commissioned on this topic, as well as evolving IEA and EU work on the refining sector. I intend to publish this report shortly.

This report, in addition to findings on refining, also includes important analysis and findings on the security of oil supplies on the island of Ireland. In particular, the report demonstrates that the improved motorway network and the robust capacity at Irish ports has enhanced the resilience of the oil supply infrastructure in recent years.

In relation to the National Oil Reserves Agency (NORA), I am pleased to say that it has made excellent progress in rebalancing Ireland’s strategic oil stockholding. In 2008, only 46% of NORA’s stocks were held in Ireland, with the remainder held abroad or in the form of stock tickets (short term contracts for delivery of oil in the event of an oil supply disruption.) Since then, NORA has worked diligently to increase its access to storage on the island of Ireland and has opened three new strategic oil storage facilities in Antrim, Dublin and Kerry. As a result, by April this year, NORA held 74% of its strategic oil stocks as physical stocks on the island of Ireland and had eliminated its dependence on stock tickets. This has considerably enhanced Irish oil security.

Under the terms of the original sale of the refinery and terminal by INPC to Tosco in 2001, two 15 year contracts with NORA were included as part of the sale - one of the contracts relates to delivery by the refinery over a 5 week period of a certain portion of refined product in the event of an oil supply disruption and the other relates to NORA maintaining a significant portion of Ireland’s strategic oil reserves at the Bantry storage terminal. The sale of the refinery by Tosco to Conoco Phillips and the subsequent transfer of ownership to Phillips 66 has not impacted on the holding by NORA of strategic oil stocks at the Whitegate and Bantry facilities and I do not foresee any immediate impacts arising from the current process.

I will continue to liaise with Phillips 66 on the proposed sale of the refinery, storage terminal and associated business.