Michael Moynihan (Cork North West, Fianna Fail)
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134. To ask the Minister for Communications, Energy and Natural Resources if he concerned for the future of the Whitegate oil refinery; if the Government has considered purchasing the refinery; if this refinery is still utilised by the National Oil Reserves Agency; and if he will make a statement on the matter. [20746/14]

Pat Rabbitte (Dublin South West, Labour)
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State owned Irish National Petroleum Corporation (INPC) sold the Whitegate refinery and Whiddy Island oil storage facilities to a private firm called Tosco Corporation in 2001. A key element in the transaction was Tosco Corporation’s undertaking to operate the two facilities (the Whitegate refinery and Bantry (Whiddy Island) storage terminal) for at least 15 years (until mid-2016) on a commercial basis. This condition also applies to any subsequent purchasers of the assets during the period. The ownership of the facilities has changed a number of times since 2001 without impacting operations.

Phillips 66, the current owners of the refinery, confirmed in mid-2013 that they had commenced a process to market their Irish business with the process expected to last for several months, during which time the company would operate on a business as usual basis. The company has recently confirmed that they are no longer marketing the Whitegate refinery but are continuing to market the Whiddy Island oil storage facilities. This entirely commercial transaction is underway and neither I nor officials at my Department are involved in it. Phillips 66 have further indicated that they are continuing to run the refinery on a business as usual basis and are proceeding with a planned maintenance regime at the Whitegate refinery in 2014.

In terms of the Whitegate refinery itself, the National Oil Reserves Agency (NORA) has a contract with the refinery that in the event of an oil supply disruption situation and when requested by NORA, they will provide NORA with a proportion (currently representing less than 10%) of Ireland’s strategic oil reserves in the form of refined product over a set period. In July 2013, I published a study commissioned by my Department on the strategic case for oil refining requirements on the island of Ireland. The study found that the existing oil import facilities on the island of Ireland taken as a whole offer a robust infrastructure that could provide comfortable alternatives in the event of a serious disruption at any of the six principal oil ports. They could supply the total oil demand, regardless of any future decisions on the operation of Whitegate as either a refinery or terminal. The development of the Irish motorway network has been significant in improving oil security of supply in recent years, facilitating the transport of oil from key ports throughout the island of Ireland. Work with counterparts in Northern Ireland is ongoing with a view to enhancing contingency planning on the island.

I outlined last July that the Government’s primary conclusion on the strategic case for oil refining is that the presence of an operational refinery on the island of Ireland 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 product imports. Despite energy efficiency advances and an increase in the penetration of renewable energy, Ireland is expected to remain dependent on oil into the medium term, particularly for transport. As such, the continued operation of the Whitegate refinery on a commercial basis is highly desirable from an oil and energy security of supply perspective. The study concludes and the Government also acknowledges and recognises that an operating refinery also adds value to the Irish economy and provides significant employment.

I further outlined that in light of our primary conclusion, the Government had agreed that my Department should liaise with the Irish oil industry and appropriate public bodies to determine available policy options that might facilitate the commercial future of refining in Ireland. The consideration of available policy options to support the commercial future of refining in Ireland is ongoing. Given that the state sold the refinery to private owners in 2001 and in the context of the state assets divestment programme which is underway, the Government has not considered purchasing the refinery. The Government’s approach should be considered in light of wider international concerns about the European refining sector.

EU Member States have recently seen several refinery closures or conversion to terminals and the International Energy Agency has generally expressed concerns about the reduction in European refinery capacity and the consequent potential security of supply implications in the longer term. The challenges facing the refining sector in Europe have been acknowledged by the European Commission which is currently in the process of carrying out an EU Fitness Check on the refining sector. So-called “Fitness checks" are comprehensive policy evaluations assessing whether the regulatory framework for a policy sector is fit for purpose. Their aim is to identify excessive regulatory burdens, overlaps, gaps, inconsistencies and/or obsolete measures which may have appeared over time, and to help to identify the cumulative impact of legislation. Their findings will serve as a basis for drawing policy conclusions on the future of the relevant regulatory framework. Officials from my Department have been participating in related EU refining roundtables and forums.