The future of the country’s sole oil refinery could be secured through a joint venture or by branching into cleaner fuels, a leading analyst has claimed.
Whitegate oil refinery’s viability is likely to come into sharper focus in the coming months as stakeholders look to find a way to retain the 300 jobs supported by the Cork facility after its owner, Phillips 66, put it up for sale last November.
Whitegate’s US owners have an obligation to operate the facility until July but with Phillips looking to offload the refinery and an election looming pressure is growing to secure its future.
One potential option that could see the facility remain open would be the State entering into a joint venture with a private partner, according to the FGE head of refining, Steve Sawyer.
“If the State were to put a system in place that basically protects the other party and covers the costs of a refinery then I think there’d be some interest there.
"It’s going to be more of a political decision than an economic one, I suspect,” said the London-based analyst.
“It’s a small refinery so its cost structure is likely to be high so any help it can get with costs from the Government would be well appreciated [by a bidder].”
This would not be without risks and would not be cheap, however, Mr Sawyer warned.
The Department of Natural Resources has not commented on the prospect of a joint-venture agreement.
However, it yesterday reiterated its stance that the continued operation of the Whitegate refinery, on a commercial basis, is “highly desirable from an energy security and economic perspective”, adding that security of supply remains “a fundamental tenet of our energy policy”.
Another route to viability could lie in partly realigning the refinery to the production of biofuels used in transport fuels like petrol and diesel.
French oil company, Total SA — Europe’s biggest refiner — recently announced its intention to do something similar with its La Mede refinery where it will invest €200m to convert the facility into a biorefinery.
La Mede will transform waste oils into biodiesel which can then be blended with diesel from conventional refining of crude oil to make a finished product.
Mr Sawyer warned, however, that demand for Whitegate may again be weak as it was the last time Phillips 66 put it up for sale.
“I personally think there’s a lot of spare capacity in Europe and the Irish market can be well fed from the Welsh refineries in the UK and indeed from Grangemouth Refinery [in Scotland],” Mr Sawyer added.
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