Dáil Éireann díospóireacht -
Tuesday, 10 Dec 1985

Vol. 362 No. 9

Adjournment Debate. - Whiddy (Cork) Oil Terminal.

Mr. J. Walsh

I thank the Ceann Comhairle for giving me the opportunity to raise this matter on the Adjournment — it was disallowed as a Private Notice Question earlier. I want to ask the Minister for Energy if he will ensure that the $44 million cash consideration in discharge of Chevron's obligation to rebuild the Whiddy oil terminal in Bantry Bay, County Cork, will be spent on industrial investment in the Bantry region; and if he is satisfied that the local workforce employed by the Gulf Oil company are adequately protected following the deal which the Government recently concluded.

It is a great disappointment in the Bantry region that the Government have allowed Chevron, who took over from Gulf, to sail out of Bantry Bay and discharge their liability to the State for a sum of $44 million which in our money is in the region of £36 million to £37 million. When one has regard to the value of the oil in the storage tanks there and which they will take with them, we are talking of a deal that is worth about £30 million net.

On 12 December 1984 the Minister for Energy in a statement to the House said that $60 million would be spent on restoring the Whiddy oil terminal in Bantry Bay. On foot of that statement and of the agreement that had been reached between the Government and Chevron, a number of people in Bantry, the workforce particularly, decided to remain in the area, in some cases getting second mortgages on their houses, and to educate their families there. Business premises in the town were refurbished and prepared generally for the activity that would result from the restoration work.

However, within 12 months the Minister had returned to the House to tell us that he had allowed Chevron to dispose of their liability and that for a sum of $44 million they were being released from their obligation to rebuild the terminal. This news is a tremendous disappointment to the people of west Cork. In Cork generally we were already dazed by the number of closures in the past year or two, but this latest announcement has knocked us out. In this House 12 months ago the Minister gave a commitment that 250 people would be employed on the construction work on Whiddy and that the permanent workforce at the terminal would reach 100.

The details of the package as announced then by the Minister were that approximately $60 million would be spent on restoring the jetty so that it would handle tankers from between 23,000 tons to 275,000 tons. In addition, the terminal was to be upgraded so that oil products as well as crude oil could be handled there and strategic stocks were to be at a minimum of 160,000 barrels. The Minister went on to tell us that any additional oil owned by Gulf at the terminal would be available in an emergency for the State's strategic reserves.

The Minister welcomed the company's guarantees of this agreement but we now have the stunning news that the agreement is to be terminated. That means there will be no construction work and consequently no jobs, either temporary or permanent, at the terminal. Many of the workers concerned had been employed continuously by Gulf, and subsequently by Chevron, for up to 18 years. The average length of time of the workforce there is 16 to 17 years. Is that permanent workforce to be abandoned now and allowed to join the redundancy line just as the remainder of their unfortunate colleagues in Cork city and surrounding areas have had to do?

I should like the Minister to tell us, too, whether the planning application which has been granted by the local authority but which is the subject of an appeal to An Bord Pleanála, will be followed through so as to ensure that final planning is granted for the reconstruction of the terminal. This is important not only for the Bantry area but for the economy generally because there are 12 tanks at Whiddy which are used to store our strategic reserves but that tank farm is useless in the absence of a jetty. One cannot visualise how the oil could be extracted from Whiddy while no jetty is available there.

Last week the Minister told us that currently and for the foreseeable future there is likely to be a ready availability of crude oil storage capacity at more attractive locations in other parts of Europe. Having attractive locations in other parts of Europe is of little use to this country and it is of no use to west Cork. It may be attractive from the Minister's point of view but that is not the case either from my point of view or so far as the people generally are concerned. We should have our own storage facility. With the involvement of the Department of Energy in the Celtic Sea and with the news that Chevron have had some encouraging shows in block 50/6 recently, it is ironic that that parent company should be allowed out of the country.

It is tragic and lamentable that, at a time when it seems as if we are about to make a breakthrough regarding an oil find, one of the major operators who were regarded, at least in the southern part of the country, not alone in terms of providing jobs at the terminal but in terms also of the refinement and processing of oil, should be let off the hook so easily — for a net sum of £30 million, an amount which undoubtedly will be swallowed up in no time in the bottomless pit of the national Exchequer. This is not a great deal of money. It would not shift the decimal point very far in national terms but it is very important in local terms. According to a commitment given by the Minister in his speech to the House last week, the money will be used to promote additional investment in the Bantry region.

Promoting additional investment in that region as well as in every other region and town and village in the country is of little use to the people in west Cork who were looking forward to the implementation of the agreement for the expenditure of $60 million in their area. That money has been grabbed from them. It was earmarked for spending in Bantry and I submit that the money we are getting now from Chevron should be allocated to specific industrial undertakings there. Consequently, I am seeking two commitments from the Minister. I want a commitment for the outstandingly committed and highly skilled workforce who have been working there continuously for 17 to 18 years and I want that money earmarked to be spent on Bantry as it was to be spent in Bantry in the first instance. It could not be used better than for restructuring the terminal. All the experts concede that a functional terminal could be provided for far less than that sum. If the storage capacity there is to be of any value that is the minimum required.

The House was told that the jetty will now be the responsibility of the INPC. When will discussions take place with the INPC and the local workforce in relation to the transfer of the workforce from their present employers to the INPC so that they can continue with the full maintenance of the asset there? The interest on the money for one year could keep the workforce in continuous employment in that region.

I thank the Chair for allowing me to raise this matter on behalf of the people of west Cork, Bantry and throughout the country. This is a tremendously valuable resource being allowed to go out of the country without a commitment to replace it. I want a commitment to the workforce and a commitment that specific projects will be introduced in that area. The people of Bantry feel that this money should have been spent in the area and they deserve it.

Minister for Energy (Mr. Spring)

As the Deputy is aware I announced the agreement with Chevron in the House last Thursday — lest there might be any confusion or accusation that I informed other parties outside this House. The $44 million to be paid by Chevron in consideration of release of Chevron's obligation placed on them by the February 1985 agreement to rebuild the damaged jetty of the Whiddy oil terminal will be paid over as an Exchequer receipt and the manner in which this money is to be utilised is accordingly a matter for the Government. As I indicated in my statement of Thursday last, as far as industrial investment is concerned the IDA are negotiating with respective promoters regarding their 24,000 square foot advance factory and their two smaller factories of 3,700 square feet each in Bantry. The IDA will continue to vigorously promote their 7,500 acre development site in the town.

I would welcome discussions with local groups with a view to an exchange of ideas whereby measures could be adopted to offset the loss of the rebuild project. In that regard meetings have taken place in Bantry with the Minister of State at the Department of Foreign Affairs, Deputy O'Keeffe, who has met a number of groups in the locality. I had a meeting with Deputy O'Keeffe today at which he reported back to me as to the concerns and priorities of local groups for projects in that area. I also stated both here and in Cork last Friday week that the Government realise that money will have to be spent in the Bantry area. I understand the Deputy's concern in relation to the disappointment at local level at the loss of jobs and projected jobs if the terminal had been brought into operation. As regards the present work force at the Whiddy terminal, discussions are under way between the company and their representatives on the terms of financial settlement for those who are to be released. The company have always recognised their responsibilities to the workers, and I am confident that this will be reflected in the discussions now in train.

The agreement with Chevron which I announced last Thursday is of primarily national economic benefit. The Government in considering the revised proposals which from the basis for the package now agreed could have insisted that up to $60 million be spent on rebuilding the jetty notwithstanding the very bleak outlook for use of the terminal and on the basis of a hope that at some indeterminate time in the future commercial possibilities might arise which would enable it to operate. This would have amounted to a gamble against uncertain odds that any real national economic gain could accrue in the foreseeable future. On the other hand the Government could have elected, as they have, to resolve the matter of Chevron's obligations to the State in a manner which would yield certain substantial and early economic gain and which recognised the realities and outlook for international oil markets and trading. It is also worth noting that the lesser and short term gain which would have accrued in the course of a jetty rebuild would by and large have been confined to particular sectors of the economy while the agreement now agreed provides the Government with more options as regards putting the national benefits of the deal to the good use of the nation.

The Deputy talks about the quality of the agreement and whether we should have insisted upon Chevron rebuilding as was their obligation under the agreement. I would remind the Deputy particularly in the presence of the Fianna Fáil spokesman for Energy, Deputy Reynolds, that during the course of previous discussions on this topic in relation to previous agreements and settlements Deputy Reynolds said when Gulf, as it was then, was trying to negotiate with the State to buy the terminal, that if a sum of money in the region of $15 million and $20 million had been put on the table he would have considered it — and Deputy Reynolds is no mean businessman. In that respect one cannot question the value of the agreement that has been achieved over the last number of weeks.

Mr. Reynolds

It is what the Government will do with the money that we question.

Mr. Spring

Deputy Reynolds would not know what to do with it. Deputy Walsh mentioned the planning appeal. Planning matters are the responsibility of An Bord Pleanála and the parties to that planning appeal. It is not a matter for me as Minister for Energy, but we hope to have some clarification in the foreseeable future as to the precise position. I would have no objections to the planning being clarified.

Mr. J. Walsh

The Minister should make sure that his agents, INPC, follow through with the planning appeal.

Mr. Spring

I do not see any difficulties in that happening.

The Deputy mentioned the question of excess capacity abroad. I am sure the Deputy is well aware that, irrespective of what value we place on Whiddy as the transnational storage point or otherwise, there are many forces outside the State which have far more impact on the international oil scene. The facts are that excess capacity does exist at more attractive locations at present. In that light, regrettably, it seems there is no propect of Whiddy having a commercial future at this point in time in international oil thinking and we must be influenced by that.

Mr. J. Walsh

The Minister is aware that Bantry Bay is the finest natural harbour in Europe.

Mr. Spring

I am aware of the absolute attractions of Bantry Bay as a transnational shipping point. Unfortunately, the position that now exists is that there are more attractive locations from the point of view of the oil industry generally. The Deputy makes the point about oil being stored in Bantry. He will appreciate that there is a cost factor involved in storage. In relation to this agreement, our strategic stocks are reduced by 1.5 days of the 90 days we are required to hold. It would not be either in the taxpayers' or the national interest were we to insist at present on that terminal containing one million barrels of crude storage oil because of the obvious cost factor involved. On the other hand, in relation to offshore development considerations, I might reiterate what I have already said on that point, that is, that the terminal will be maintained. But I would emphasise that it will be maintained at minimal cost by the INPC. The fact that there will not be any oil in the terminal obviously means that they can maintain it at far less cost than the present operation.

The other factor to be taken into account is that the lead-in time from a declaration of a commercial oil find to actual extraction of hydrocarbons would be a sufficient time in which to consider options for the utilisation of Whiddy, if that was deemed to be desirable, if it would seem appropriate in the overall strategy for development of an oilfield. That would then allow time for appropriate technical action, whether that meant the recommissioning of the tank farm installation, loading or unloading facilities or otherwise.

In the context of the people of west Cork, I should say that this agreement with Chevron does not diminish the potential of Whiddy in the long term. We must accept the fact that there are many outside influences in the international oil scene which mean that, whether we like it or not, we are not the masters of our destiny in that respect. But the situation does not diminish the long term potential. If at a future point in time it appears that Whiddy has a role to play in strategy for the development or exploration of oilfield potential, then that can be done without any delay.

The understandable sense of loss by the local community in Bantry extends perhaps to a much wider area and does not affect just the town of Bantry itself. I am aware that the hinterland of west Cork has been affected since the inception of the whole Whiddy project. I have said and given a commitment that the Government will be responding — I hope in an effective manner — not merely trying to assuage public feelings in the area by putting money into projects which are nonsensical or meaningless. Projects which emanate from local interest groups who have behaved very sensibily in relation to this whole matter, which can be looked at by the IDA, by the Departments concerned, will be examined by the Government, and the Government will not fail Bantry on this issue. I am firmly convinced that projects which withstand the tests, which look like projects that can survive, that can withstand the marketing and other economic evalutions they will have to undergo——

Mr. J. Walsh

Any ray of hope for the workers? Any word at all for them?

Mr. Spring

As I have said, the Chevron Oil Company will not let down their workers. Both Gulf and Chevron have dealt responsibly with workers and in terms of the rights of workers. I am sure they will act responsibly in their discussion with the workers at present. If a project comes to light, then obviously the Government will be only too glad to implement that project. It is my intention to continue, with the assistance of the Minister of State in the constituency, to examine any projects that come forward.

The Dáil adjourned at 9.50 p.m. until 10.30 a.m. on Wednesday, 11 December 1985.