Ireland’s only refinery has endured a difficult recent past which culminated in losses of $280m (€250m) in 2014 — the most recent year for which accounts are available.
The 71,000 barrel-per-day refinery recorded an operating loss of $148m after revenue fell $268.8m during the year. Current owners Phillips 66 also reduced the value of plant and equipment resulting in an impairment cost of $127.6m.
Senior Irving Oil executives appear unperturbed by the refinery’s poor financial performance claiming to be confident of its future profitability.
“Well, it’s very market- dependent, obviously. These refineries, they try to work on strong averages so hopefully margins are going to improve here over the next coming quarters and years.
“That’s one of the beauties [of Irving]. There’s a long history since 1924 as a family business. They’ve certainly taken a longer view and we don’t tend to run our options quarter to quarter.
“We wouldn’t have made the investment based on this year’s quarters. This is really about going into the future so we’re feeling confident about it,” said Irving Oil chief operating officer Mark Sherman.
Crude oil prices have collapsed over the past two years from $100 a barrel in June 2014 to around $50.
The acquisition of Whitegate could help Irving, which owns Canada’s largest refinery, serve what it refers to as the Atlantic Basin.
Currently, 75% to 80% of its product is shipped to Boston and the wider New England area on the eastern seaboard of the US.
“What we would call the Atlantic Basin has certainly been an area of production and shipments for a number of years and we really see this as a natural extension of that same Atlantic basin, obviously just going to the other coast,” Mr Sherman said.
Whitegate could also provide feedstock to Irving’s Saint John refinery in Canada. Despite having a name as tough-nosed business people, Irving has made all the right noises since its acquisition of Whitegate; offering a long-term commitment to operate the refinery on a commercial basis and maintain all of its workforce.
“We take these types of investments very seriously. We certainly don’t buy things to close them. We’re looking at a long-term investment here,” Mr Sherman said.