Alex White (Dublin South, Labour) | Oireachtas source

I welcome the opportunity to address the House on this matter and I thank Deputy Stanton for raising it. Ireland has a single refinery, at Whitegate in Cork, which is owned and operated by Phillips 66, a private company. As the Deputy stated, Phillips 66 supplies approximately 40% of the main products on the market, excluding jet fuel. Under the 2001 sale and purchase agreement, when the State sold the refinery, there was a legal requirement on the refinery owner to continue to operate the refinery for a minimum period of 15 years until July 2016. Commercial decisions beyond July 2016 are a matter for the company, which operates in a fully liberalised market.

In 2012, the Department commissioned a study on the strategic case for oil refining requirements on the island of Ireland. This study examined various scenarios, including the all-island dimension of oil security and the expected impact if the refinery were to close completely or be converted to a terminal. Further to consideration of the report, the Government's primary conclusion on the strategic case for oil refining was that the presence of an operational refinery on the island of Ireland is highly desirable. It provides flexibility, enhancing the options available to the State in the event of an oil supply disruption, by providing an alternative source of product, thus mitigating a complete reliance on imports. The Government also noted the economic importance of the refinery in terms of employment and other economic benefits. The report was published on 30 July 2013.

Refining in Europe has been struggling since the onset of the recession in 2008. There have been several refinery closures, some conversions of refinery sites to terminals and some takeovers, mainly by Asian and Russian owners. Three refineries in the UK have closed down in the period. The European Commission initiated a refining fitness check process in 2013 to examine whether the combination of European policies and legislation was having a negative impact on European companies vis-à-visthe rest of the world. A report from the European Commission on the outcome of the refining fitness check, due to be published shortly, indicates that energy prices, particularly natural gas prices, have been a significant factor in the loss of competitiveness of European refineries vis-à-visthe rest of the world. It indicates that about one fifth of the loss of competitiveness can be attributed to European directives and regulations.

The local management of Phillips 66 informed the Department on 12 October last of the company’s intention to put the refinery and marketing business up for sale. Any sale of the refinery would be a commercial matter between Phillips 66 and a potential purchaser. While this process is under way, Whitegate will continue to operate on a business-as-usual basis. Whitegate's management has repeatedly indicated that it is committed to honouring the 15-year agreement under the 2001 sale and purchase agreement. This commitment is not, and would not be, affected by the planned sale.

Ireland is 98% dependent on oil for transport, and has significant oil dependence in the thermal heating sector. The lack of a refinery would mean that Ireland was entirely dependent on the import of already-refined product. Studies have shown that it is likely that crude oil could be easier to access than finished product in an oil shortage situation. Recently, I had a number of meetings with my Cabinet colleagues to discuss the future of the refinery. In summary, the outcome of these discussions is that there is recognition of the strategic importance of the refinery at Whitegate from an energy security perspective. Security of supply remains a fundamental tenet of our energy policy. I updated the Government on the matter earlier this week.

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