Tommy Broughan (Dublin North East, Labour)

The Minister can return to that in his response. The Government still has six or eight months left to achieve it. Ireland's IEA oil stock holding for 2006 is 2,278,800 tonnes of crude oil equivalent. According to the Department, this is higher than the EU obligation because of "differing methods of calculation and different times for changing the year that the data is based on". We are also obliged to manage contingency plans, including arrangements for the release of national oil reserves to minimise the adverse effects of a major oil shortage. I understand there is a 7% requirement in that regard. Will the Minister give the House some more information about that and the powers he will have under the Bill with regard to the release of oil onto the market?

Last winter, when Britain experienced serious problems with its wholesale gas market and we had a series of amber alerts and a red alert in our electricity system, I asked the Minister what contingency plans were in place in the event of a disruption to supply in the Irish system. He was very reticent about his strategy in that regard and made wild allegations about scaremongering by Opposition Deputies rather than answer a perfectly reasonable question about the serious danger to our energy supply. Before 1995 the oil companies had to meet a substantial portion of Ireland's stockholding obligations. It is astonishing that while the national oil reserves agency, NORA, has existed since 1995, we are only getting around to legislate for its powers today.

A large and growing body of opinion concurs with the view that we are approaching an energy watershed and that comprehensive plans must be put in place to deal with seriously reduced and more expensive supplies of oil and gas. Forecasts for how long the supply of oil will last are divided as to when the so called topping-out point or peak will arrive. Optimistic analysts, which generally include the oil companies and agencies, such as the US Department of Energy, estimate that there are perhaps 2 to 2.7 trillion barrels of oil left in known wells. In this scenario, oil production will peak somewhere between 2020 and 2040. Early "toppers" at the other end of the spectrum predict a much earlier peak of oil production. In their estimation, with just 1 trillion barrels of conventional oil remaining, production could peak as early as 2008. Our next Government may, therefore, have to meet a major challenge in this regard, yet we have only belatedly got around to legislating for NORA.

Before coming to the Bill, I want to deal with the issue of the Irish National Petroleum Corporation, INPC. In 1979, INPC bought the Whitegate refinery on behalf of the State after its then owners decided to pull out. In 2001, Whitegate oil refinery, Whiddy Island oil terminal and other INPC related assets were sold. When these were sold to the Tosco Corporation on 16 July 2001, the State's involvement with the INPC in operational aspects of the oil industry was concluded. Legal provision for this was provided under the Irish National Petroleum Corporation Limited Act 2001.

I understand the company is still not in a position to pay its outstanding payments to the Exchequer. I have asked the Minister about this three times since he took office and also asked the previous Minister about it. The current office holder informed me that the INPC has paid approximately €20 million to the Exchequer and that the total net return to the State from the sale would be in the order of €30 million. Where is the missing €10 million? In a previous reply, the Minister told me the State would gain approximately €35 million and when the Government announced the sale, media headlines reported we would get €101 million. Where are the missing millions?

In his response on this debate, will the Minister tell us what is happening with regard to the INPC assets that arose as we established NORA as the flagship State agency? Will we get any more money and what happened to our money? Is this a saga in which the Comptroller and Auditor General and the Committee of Public Accounts should become involved?

The primary function of NORA under the legislation is to facilitate the holding of strategic oil reserves at a level determined annually by the Minister and to meet EU and IEA obligations. The enforcement provisions of NORA in Part 6 of the Bill are welcome. This is perhaps an area under which we could conclude the outstanding issues relating to the INPC.

We seem to get new energy scares every few days. Recently Polish newspapers reported a fresh Ukrainian gas crisis was looming as a result of low Ukrainian gas reserves. Our economic situation and our dependence on oil energy make us vulnerable. Oil prices have rocketed over recent years from €25 a barrel in September 2003 to €70 or more in recent times. What will happen to our economy if oil reaches €100 a barrel and how will we exist? It could even reach, as predicted by some New York city brokers, €200 a barrel. What impact will that have on us? There are numerous explanations for these increases, ranging from immediate concerns surrounding security of supply due to strikes and hurricane threats to oil platforms to general geopolitical instability that often encompasses this area.

Meeting the global daily demand of 80 million barrels a day and our daily demand of 200,000 barrels is an enormous task. When we look at the reserve strategies adopted by other countries, including countries becoming more industrialised such as China and India, we realise the daunting task we face and that we should be more proactive.

Section 35 of the Bill needs to clarify the issue of the release of oil stocks, especially with regard to price hikes. Perhaps the Minister will come back to that matter.

Part 4 informs us that one of the key duties of the agency is the maintenance of stocks. One of the issues discussed in this regard is our high vulnerability. We need to know what percentage of our stocks are held abroad and whether, to enhance our security of supply, we should examine measures for holding a greater amount of our strategic oil reserves in Ireland. The difficulty for us is to ensure that the large amount of stocks held abroad on ticket, or however, are accessible to our economy, especially if there is disruption to the physical transportation of fuel supplies to Ireland following a serious crisis. Sections 32 and 33 are areas to which the Labour Party may return with amendments.

In answer to a recent parliamentary question the Minister stated:

a number of bilateral oil stockholding agreements have also been concluded with other European Union member states — Belgium, Denmark, France, the Netherlands, the United Kingdom and Sweden. Such agreements allow for the storing of Irish oil stocks within these jurisdictions under guarantee by the host country that it would not oppose the transfer of the oil in question to Ireland in the event of an emergency.

However, that guarantee may not seem so rock solid if a serious oil crisis arises or if there is a major disruption to the physical transport infrastructure to get the oil to our shores. I understand that Japan has a type of double protection with a strategic oil reserve under the control of the state with the oil companies also required to hold a certain percentage of oil in reserve. We should consider enhancing that element in section 33 covering holding contracts.

In the overall communications, marine and natural resources portfolio we have had major debates about networks. In this regard I warmly welcome what the Minister is reported as saying at a recent conference on the future of the ESB, which seems to accord with the policy of the Labour Party, regarding the necessity of holding the network. We have heard today about the oil network and the market power Topaz is likely to gain. I have great concern about the recent surge in service stations that are closing down. As the Acting Chairman, Deputy Woods, will be aware, in my constituency no fewer than seven filling stations have closed, mainly in the east of the constituency. For instance the Statoil and Texaco filling stations at the entrance to Howth have closed. Two more filling stations close to Sutton Cross have closed and it is has recently been reported that a planning application has been made for development of the Maxol station on the Baldoyle Road. This may have already received approval. There have been further closures at Kilbarrack and Coolock.

The only new petrol station to open in the constituency is the new Tesco service station at Clare Hall shopping centre. Dublin North-East seems to be typical of constituencies across the country and particularly the urban ones. The former service station owners are cashing in on the property boom as they seek to maximise the value of the filling station properties. The end result will be a considerably smaller network.

In a recent article in the Sunday Business Post, the distinguished economist, Moore McDowell, indicated his belief that Dublin was set to follow in the footsteps of London and Paris, where the downtown areas have only a handful of petrol stations charging extremely high prices, which they must charge to exist owing to the value of the land on which they are located. In these cases the customers are paying for the use of the land to get the service they need. Owing to the Government's failure to provide the necessary resources for public transport, people depend on their cars. The Minister can imagine what could happen if we had a major disruption or price hike. Price gouging would take place and the network would be too small to look after all the vehicles in the economy. The queues of cars could stretch for miles given the continuing haemorrhage of filling station business. The Minister should address the issue of the network in Part 8.

I welcome the €1 billion borrowing limit outlined in section 26. I will ask the Minister to give more detail on Committee Stage. The Houses of the Oireachtas through the Joint Committee on Communications, Marine and Natural Resources should have an input into the five-year strategy. As we already asked the Minister to do regarding fisheries, he should bring the strategy to the House so that the elected representatives of the people and not just the oil interests can put forward their priorities.

I will also table a number of smaller amendments on Committee Stage. I do not believe a chief executive should also be a director as outlined in section 14. The chief executive should report to the board. I note that the Minister failed to specify a gender requirement for membership of the board. The Labour Party proposes a 40% requirement for both genders on boards and I will table such an amendment. In the appointment of directors for this agency, the Minister should have made provision for avoiding any conflict of interest among potential appointees, especially among individuals who may have been or still are intimately involved in the global oil business. We remember previous appointments to agencies where conflicts of interest arose. Under the Scottish Executive system, the Commissioner for Public Appointments monitors all such appointments and no appointments can be made unless they have been scrutinised first by an assessor in the office of the commissioner. I will also propose an amendment to section 24 regarding a record of interests for directors and staff. Deputies and Ministers have been required to declare their interests for many years. It is vital that the same applies to this national agency.

The Bill could have afforded the opportunity to address the issue of lack of competition in the oil market in addition to the issue of security of supply to ensure that price gouging does not take place. We have seen the massive economic power Russia has gained on the back of its great gas reserves. During the same period the world's largest publicly traded oil company Exxon Mobil posted a quarterly profit of almost $10 billion, which was the largest quarterly profit ever earned by a US company. Shell, BP, Chevron and Conoco Philips also experienced huge increases in profit in the same period. When one views the websites of such companies, they all appear to have become "green" companies. They have adopted logos reminiscent of the Irish Green Party and they invite the viewer to work out his or her CO2 emissions. They appear to be "green" energy companies rather than oil and gas exploration companies. They are making so much money that they do not know what to do with it.

The windfalls the oil companies are receiving are in stark contrast to the reality for Irish consumers of petrol, home heating oil and natural gas, the price of which is going through the roof. Last winter we had the spectacle of some of our senior citizens in Dublin North East wearing overcoats in the early afternoon because they were fearful of turning on their central heating. This agency, our oil company, should be able to address the issue. It is time to widen NORA's powers and allow it have a wider remit over key strategic energy issues.

On Committee Stage, I will return to the issue of the release of stocks. I welcome that the company is a self-financing commercial semi-State body, which has been possible because of the 0.476 cent levy that has been in place since 1995. I welcome the elements of enforcement introduced by the Minister.

The Labour Party warmly welcomes the statutory underpinning of NORA, which is long overdue. However, it could represent a lost opportunity. We could have had a much more comprehensive oil strategy and could have emulated the Swedes. We need to review the issue of market dominance and the lack of competition. NORA should have a role, as it should in the area of exploration. Above all, we should be increasingly concerned about high oil prices and Ireland's worrying addiction to oil, which the country needs to break in coming years.

See this speech in context