Noel Harrington (Cork South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Ceann Comhairle's office for selecting this issue for discussion and the Minister, Deputy Pat Rabbitte, for coming to the House to deal with it.

Late last week Phillips 66, a subsidiary of Conocophillips, announced through Deutsche Bank its intention to put the Whiddy Island oil storage terminal and Whitegate Oil Refinery on the market. This has caused genuine concern among people in Cork, particularly those employed at the Whiddy and Whitegate terminals. At a national level these two facilities are of strategic importance to our oil and gas security. We have previously discussed the future of refining in this country. While both facilitates are separate in terms of operation, they are equally important.

The Whiddy Island terminal was set up by Gulf Oil and commenced oil storage operations in the 1960s. It has had a chequered history since, most notably the Betelgeuse disaster in 1979 which resulted in the loss of 50 lives. I understand the jetty has still not been repaired. The State has had an interest in the Whiddy oil terminal since. The development of a single point mooring has resulted in increased activity in recent years. International experiences such as the turmoil in north Africa, in particular Libya, have led to increased use of the Whiddy oil terminal for transshipping fuel and the storage of crude and other oil products which, in turn, has led to the creation of hundreds of jobs. The proposed sale of the terminal by Phillips 66 has, therefore, caused some concern.

The Whitegate Oil Refinery, while not in my constituency but of equal strategic importance to the country, is also up for sale. The people directly employed at these facilities need reassurance from the Minister in regard to the Government's future policy for the oil storage facility, the national oil reserves on Whiddy Island and at other locations around the country and, critically, any imminent decision on the future of refining in this country.

As regards increased activity in oil and gas exploration off the south and west coasts, the Minister might elaborate on whether there could be a tie-in between storage, refining and the exploration industry. It is critically important for the future energy security of the State that he make a statement on the future of these facilities.

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context | Oireachtas source

I can never get accustomed to speaking to a House in which there are no Opposition Members present. The Acting Chairman possibly provides the only opposition for the Government.

Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context | Oireachtas source

The most coherent opposition.

David Stanton (Cork East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

They have abandoned ship.

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context | Oireachtas source

This is an entirely new experience for me.

I thank Deputy Noel Harrington for raising his concerns which I am sure are shared by many people about the somewhat unexpected announcement made last week. Security of oil supply is central to the economy and our economic and social development. Oil is imported either in the form of petroleum products or as crude oil. The crude oil imported into Ireland is refined in Cork. The refinery supplies about one quarter of the petroleum product on the domestic market. Some 75% of Irish oil supplies are imported in product form from neighbouring markets. Oil comprised 59% of total final energy consumption in Ireland in 2011. While significant efforts are under way to improve energy efficiency and increase renewable energy levels, it is clear, particularly in the heating and transport sectors, that oil will continue to play a pivotal role in the economy in the medium term. For this reason, ensuring a robust oil infrastructure on the island is an essential part of our security of supply strategy.

Ireland is a committed member of the International Energy Agency, IEA, and was one of its founding members. As part of our IEA and EU obligations, we hold 90 days worth of strategic oil stocks for use in a supply disruption. The National Oil Reserves Agency, NORA, holds 88 of Ireland's 90 days of strategic reserves of oil. The remaining two days worth are held by large oil consuming companies. In recent years NORA has been increasing the proportion of stocks held on the island of Ireland in line with Government policy to improve accessibility and the availability of oil stocks during an oil supply disruption.

At the end of December 2008, NORA held 46% of its stockholding obligation as physical stocks on the island of Ireland, 38% as physical stocks abroad and 16% as stock tickets. By the end of April 2013, NORA had made significant progress and now holds 71% of strategic oil stocks as physical stocks on the island of Ireland and 29% as physical stocks abroad.

To underpin this development, NORA has opened three new oil storage facilities, in Antrim, Dublin and Kerry, which have considerably enhanced oil security on the island of Ireland. NORA will continue to seek out new storage facilities on the island, subject to value for money considerations. Reducing energy consumption through energy efficiency measures is the first pillar of energy policy. We are also working hard to ensure that we meet our 2020 renewable energy target of 16% of all energy consumed across the economy coming from renewable sources. Discussions on the oil-refining sector in Europe have been ongoing at EU and IEA level in the last two years in view of how the sector has been developing internationally. My Department has been following these discussions closely.

Phillips 66, the current owner of Ireland's oil refinery in Cork, recently confirmed that it had commenced a process to market the refinery, storage terminal and associated business. The company has confirmed that it intends to continue operating the assets as usual during the marketing process, which is expected to last for several months. The refinery was in State ownership for some years and was operated by Irish National Petroleum Corporation, INPC, which sold the refinery together with the Bantry terminal in 2001 to a private company known as Tosco. Tosco subsequently sold on the refinery. 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.

My Department recently commissioned a review of the strategic case for oil refining requirements on the island of Ireland. The report has been finalised and was recently considered by the Government. I plan to publish the report shortly. My Department is also continuing to engage with Phillips 66 regarding its future plans for the Irish business.

Noel Harrington (Cork South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Minister for his reply, in which his concern about this development showed through. I acknowledge the work Deputy Stanton has done on the east Cork facility at Whitegate and his continuing engagement with the management there. It is a very sensitive issue. We look forward to the publication of the report on the refining policy of the Government. I presume the report will be discussed at the joint committee, where we could debate the issue further. I welcome the Minister's statement about the diversification of oil storage facilities, which can only enhance our fuel security.

A concern that must be addressed relates to job security at both facilities. The Minister will share my concern that in addressing national issues of oil security, refining and storage, issues of employment and management at the facilities must also be considered. I thank the Minister again for his response and look forward to the debate on the policy on oil refining and storage that he will shortly engage in.

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context | Oireachtas source

I assure Deputy Harrington that it is my intention in the very near future to publish the strategic study and I would be very happy to see it debated in the joint committee. It is open to the committee to bring in representatives from Phillips 66 to discuss different aspects of that company's decision. The fact is that the obligations to 2016 will remain in place. It is difficult to say what will happen in the months ahead, however. It has been the thrust of policy of the National Oil Reserves Agency to ensure that more and more of the stocks needed to meet our 90-day obligation are located in Ireland. Bantry, in the Deputy's own constituency, is hugely significant in that regard. I assure Deputies Harrington and Stanton and other colleagues from the region that we were dealing with the future of Whitegate before any announcement was made by its current owner on its long-term plans. Studies, both completed and under way, have been undertaken in Europe on the scale of refining capacity in the EU at the moment and on how essential or otherwise it is that each country maintain the same scale of refining capacity as existed in days gone by.

The Deputy asked me what connection, if any, existed between the prospects for oil finds in the broad vicinity of the facilities and the maintenance of Whitegate. I have visited the area and am aware of direct discussions between, for example, Barryroe and Whitegate management. It is too early to say what the story is, but certainly there is oil in the Barryroe strike. What has not yet been established is whether it is commercially viable and extractable. It may require the drilling of another two or three wells to establish that. It is encouraging, however. Clearly, the lead shareholder in the company sees a direct link between the prospect and the availability of the facility at Whitegate. In addition, the Deputy will know that we have recently started to drill off Dún Chaoin, which is a particularly hopeful prospect. One cannot say with any certainty, but it appears to be a significant development. All of this will be taken into account. Perhaps the time to resume the discussion will be when the Deputies have accessed the strategic study and have an opportunity to tease it through in committee.