Cork refinery closure could cost Munster consumers €10m a year

The closure of Whitegate oil refinery could cost consumers in Munster nearly €10m a year in higher oil prices, a Government report has said.

The report, entitled Study of the strategic case for oil refining requirements on the island of Ireland, found that if the Whitegate refinery was closed and not reopened as an oil importation terminal, consumers in Cork, Kerry, Limerick, Waterford, Tipperary, and Clare would be forced to pay higher oil prices.

“In the event that Whitegate ceased operating as a refinery, the oil consumer could be in a vulnerable position unless some provision was made well in advance to ensure the controlled transition of Whitegate to a terminaling mode,” the report said.

It said the increased cost of servicing Munster through Foynes, Co Limerick, would be €9.5m a year.

“If Whitegate was to close completely, with no terminaling operation, all of counties Kerry, Cork, Limerick and much of Waterford, Tipperary, and Clare, would become dependent on a single supply node; namely Foynes,” said the report. “This would increase supply costs of about 0.9 million tonnes per annum of demand in the region. This would give an incremental cost to the local economy of around €9.5m per annum.”

Whitegate oil refinery is already for sale, as the Irish Examiner reported in June. Philips 66 has appointed Deutsche Bank to oversee the sale.

The report says if Whitegate ceases to refine oil, it is unlikely to be converted to an oil terminal as there is already capacity in the pipeline.

“If Whitegate was to cease refining, it might still be operated as a terminal, possibly with increased throughput capacity,” said the report. “Given that Whitegate already shares a significant part of its delivery orbit with Dublin and Foynes, it seems unlikely that such an increase in terminal throughput could be justified. It should not be taken for granted, however, that if refining operations were to cease at Whitegate, the terminaling facilities would continue to function.”

Energy Minister Pat Rabbitte said he was in favour of continuing the operation of the Whitegate on a commercial basis, as it adds to security of energy supply and enhances the economy.

“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.

“As such, the continued operation of the Whitegate refinery on a commercial basis is highly desirable.”