David Stanton (Cork East, Fine Gael)
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I thank the Office of the Ceann Comhairle for allowing me to raise this matter today and the Minister for Communications, Energy and Natural Resources, Deputy Alex White, for being present. I really appreciate it.

This issue concerns the importance of the oil refinery in Whitegate. It is the only oil refinery in Ireland and, as the Minister knows, it is up for sale. I want to recognise the fact that the Minister, his Department and his officials engaged with the owners, management and workers over the past while. Today, all of us have the opportunity to discuss the issue in the Dáil. I am interested in hearing the Minister's reaction to my view that the refinery is of strategic importance to the State.

It supplies 40% of Ireland's transport needs and sells on a wholesale, rather than retail, basis. I have been told it turns around about 200 lorries per day, a figure which has risen to well over 300 at times of peak demand. If it were to close, it would be a major shock to the State, and that is why it is of strategic importance. The fuel, as the Minister knows, is used for transport, industry, agriculture, shipping, food production, heating, hospitals, haulage, public transport and so on. The refinery also produces liquid petroleum gas for a local company, Calor Gas.

All other fuel is imported, mainly from the UK. The refinery acts as a competitor to the importation of fuel. No other country in Europe has allowed all of its refining capacity to be closed, and that should not happen in Ireland. I ask the Minister and the current and future Governments to support the continuation of refining in Whitegate and to continue the positive engagement that has occurred to date with the owners, any future owners, the workforce and local management.

I understand it is the wish and hope of the owners and local management that refining will continue - the refinery is being sold as a going concern. Refining is a high-volume, low-margin business, as the Minister knows. In 2014, the refinery made a loss, but some of that involved write-downs. I understand it is doing very well this year. Of more significance, however, is its importance to the State. We know what is happening in Europe and around the world. We live in volatile times. The risk, fear and concern is that we, as an island nation, would be exposed if the refinery was to shut down. We may be at risk of having a shortage of transport fuel, and that would be a major blow to our economy. That is why the refinery is of strategic importance.

Locally, over 300 workers are employed in the refinery, comprising 157 staff and 130 contractors. About €100 million is spent in the local economy in the Cork region. It is also very important from that point of view. I have been told that 600 ancillary jobs are dependent on the refinery, which again shows its important. It accounts for about half of the shipping tonnage in Cork Harbour.

It was offered for sale in 2014. The Bantry terminal was sold and the current obligation expires in July 2016. That is why it is now crucial to engage with the process and for the Government and State to be as supportive as possible to ensure the continuation of refining in Cork. We need to do whatever we can to encourage purchasers to come to Cork and continue the refining capacity and operation as much as possible. I am interested in hearing what the Minister has to say about this issue. I contend this is an important and strategic refinery for national and local reasons, and I have brought the matter to the floor of the Dáil today so that the Minister has an opportunity to respond.

Alex White (Dublin South, Labour)
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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.

David Stanton (Cork East, Fine Gael)
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I warmly welcome the Minister's statement that the Government recognises the strategic importance of the refinery at Whitegate and supports the continuation of refining in Whitegate, not only for the east Cork area but for the State. Oil expertise is difficult to acquire and replace. There is enormous expertise in refining in Whitegate. The refinery is ahead of itself in respect of biofuel technology, and given the climate change discussions in Paris at present, this is crucial. The refinery is quite anxious to continue this expertise and technology. It is involved in the addition of fatty acid ethyl ester to diesel and biodiesel. It has also been an extraordinarily good neighbour in the area, supporting the local community and really and truly engaging in a most positive way.

I am sure the Minister realises that to try to put in place a refinery anywhere in the State would be very difficult. People would not really want one in their backyard. Over the decades, since it was established in 1959, the refinery has been an extraordinarily good neighbour, and the local management continues this. I am pleased with the Government's position that refining should continue in Ireland and that it is of strategic importance, and the Government will support in whatever way it can the continuation of refining in the State.

Alex White (Dublin South, Labour)
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I thank the Deputy again for his observation and insights. I remind him I have had occasion to visit the refinery and met management and workers to understand the value of the facility in the greater region where it is located. I have no doubt the Deputy is absolutely right in what he says about the refinery being a good neighbour and an important part of the economy and the fabric of Cork Port and the broader region. This is very well understood by the Government, but the fact remains that it is owned by a private company, and commercial decisions are made by the company in respect of the refinery. Having said that, the Government has always stated, and I state again now, the importance we attach to having a refinery here. This is the single refinery in the island of Ireland and it is of strategic importance.

The report I mentioned in my earlier remarks, published in February 2013, was discussed by the Government at the time. A number of options and suggestions on how the Government might assist were examined during that period, and certainly, as a Minister, I would want to do anything reasonably within my powers to ensure we maintain the single refinery we have, always remembering the fact that it is a commercial operation. The period during which it is required contractually to continue refining expires in July 2016. We certainly want to keep this matter closely under review and maintain good contact with local and US management, whom I have met, staff representatives, workers and trade unions, who have taken a close interest and a very responsible approach to the future of the refinery.