Written answers

Tuesday, 24 June 2014

Department of Communications, Energy and Natural Resources

Offshore Exploration

Photo of Michael ColreavyMichael Colreavy (Sligo-North Leitrim, Sinn Fein)
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336. To ask the Minister for Communications, Energy and Natural Resources the reason the State is liable for the derelict Bantry offshore jetty; the reason there is no limit on time or amount to this liability; and if he will make a statement on the matter. [26953/14]

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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A company called Gulf Oil Corporation originally built the oil terminal on Whiddy Island in Bantry Bay to use for international oil transport purposes. In addition to onshore oil storage tanks, the facility had a berth (known as a jetty) capable of accommodating large oil tankers. In 1979 a major accident occurred as oil was being unloaded from a tanker called the Betelgeuse. Fifty persons in all lost their lives in this tragic incident, which included a major fire and a series of explosions. The vessel was rendered a total wreck and extensive damage was caused to the offshore Jetty and its installations.

As a consequence of the accident, the Terminal was non-operational for some 19 years. Gulf Oil Corporation ceased to exist as an independent company in 1985, when it merged with Standard Oil of California, with both re-branding as Chevron in the USA. In 1986 Chevron withdrew its operations at the Terminal. At that time the State then took over the terminal on Whiddy Island, including the derelict Jetty. An “exit payment” of US$44 million was paid to the State by Chevron in respect of the State taking over the Jetty, in the context of any future costs associated with the removal or repair on the Jetty, in accordance with environmental standards.

The State re-commissioned the terminal in 1998 following the construction of a Single Point Mooring buoy (SPM) in Bantry Bay. The original Jetty was not necessary for the commercial operation of the terminal as this could be carried out using the SPM and the small craft harbour (on the other side of the island) for smaller operations. In 2001 the State sold the Whitegate refinery together with the Whiddy Island terminal facility to Tosco Corporation. Tosco made it clear that they would not take any responsibility or liability for any issue relating to the Jetty. The State accepted Tosco’s position on this matter during the sales process and provided a guarantee to that effect.

The guarantee entered into by the State to retain liability for the Jetty at the time of the sale to Tosco related to a liability not held by any other party and in respect of which the State had previously received compensation. If the facilities had not been sold, the State would have continued to be potentially liable in this area, without any formal limitations. Irish National Petroleum Corporation (INPC), which is the State company which previously ran the refinery and Whiddy Island facility, retained certain rights and obligations under the terms of the Sale and Purchase Agreement (SPA) relating to the 2001 transaction. INPC has no staff and a Board oversees the company’s outstanding liabilities. INPC recently tendered for an Engineering and Risk Assessment of the Jetty for the purpose of evaluating its current condition.

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