State Papers: Government was dubious about Saudi investors' 'sketchy' $1bn plan for Cork oil refinery

The Saudi proposal included taking a 80% shareholding in the State-owned Irish National Petroleum Corporation (INPC), which operated the refinery in Whitegate. File Picture: Denis Scannell

The Government was dubious about the offer of a $1bn investment in the Whitegate oil refinery and Whiddy Island oil terminal in Cork from a group of Saudi investors in the mid-1990s because the plans were “sketchy", while their advisors showed a “lack of technical and business competence”. 

Files released by the National Archives under the 30-year rule show the Government favoured a smaller $70m investment offer just confined to the Whiddy facility from a UAE-based sheikh because it was more “businesslike”, although that too did not proceed.

The Saudi proposal included taking a 80% shareholding in the State-owned Irish National Petroleum Corporation which operated the refinery in Whitegate as well as constructing a new refinery with a capacity of up to 150,000 barrels per day for distribution around Europe.

The Government had valued the existing facility in Whitegate at $40m.

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The investors were described as “a number of prominent and wealthy Saudi personalities” including Sheikh Haleem Faris Al Rahbani who had access to supplies of Middle East crude oil. As part of their plans, they proposed to transfer crude oil shipped to Whiddy via a pipeline to Whitegate.

However, one senior civil servant wrote in December 1994 the Department of Transport, Energy and Communications had seen nothing “to convince them that Rahbani’s people have shown the competence to be entrusted with custody of our strategic reserve".

The official noted that the group’s claims of having experience of refining in Angola and Djibouti were unverifiable which was “very damaging”.

Files show that the group requested a formal letter from the Government in April 1994 in support of the project but its request for exclusive negotiations was rejected as the Government was also considering a bid from another investor at the same time.

Eight months later, the Minister for Energy, Brian Cowen, wrote to say that while they would be welcome to establish a refinery elsewhere in Ireland, their proposals did not fit with the Government’s policy for the development of the energy sector which was based on keeping a controlling interest in INPC.

Energy minister Brian Cowen wrote to say that the proposals did not fit with the government’s policy. File Picture: Denis Minihane

However, a Saudi banker advising the group had not passed on Mr Cowen’s letter. The financier told the Irish ambassador to Saudi Arabia, Brendan J Lyons, that the sheikh would “blow his top” and walk away from locating the project in Ireland if he read it.

The ambassador asked him to hold on to it while the proposal could be considered by a variety of Government departments in light of the significant level of investment promised.

At a meeting in Riyadh in February 1995, the ambassador found Sheikh Rahbani was frustrated at not being able to progress the project because he could not get information which would enable him to cost the upgrade that the Whitegate refinery needed.

However, Mr Lyons reminded the sheikh that his advisers had not been able to provide information on the composition of his group of investors or his plans for distributing the output of the refinery.

The ambassador also pointed out that the group’s advisers had not been impressive and some of their information had been incorrect. One official had described the group’s submissions as “gobbledygook,” while it was also felt that the group had suffered from being advised by “a plethora of advisers, bankers and lawyers".

Files show Mr Lyons worked assiduously to keep both the investors and the Government on board with the proposed investment and even drafted a series of responses to be sent by the Minister for Energy.

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However, he expressed frustration in one letter that neither he nor the Department of Foreign Affairs had been able to persuade the Department of Transport, Energy and Communications to take a proactive role towards the Saudi proposal.

“I think it is very strange that we should have to persuade, never mind that we cannot persuade, a Government department to give full attention to a $1,000 million project for which an investor is at least considering Ireland as a location,” said Mr Lyons.

However, when informed that Mr Cowen’s successor, Michael Lowry, was going to respond in a way that was “less than forthcoming,” the ambassador remarked: “This is no way to attract foreign investment.” 

A memo shows officials wondered why the Saudis wished to construct a refinery in Ireland but an intermediary, a Saudi banker, explained that the Whitegate refinery would give them an immediate supply of refined products and a short lead-time for their project to blend lubricating oil.

It was made known to the Government that the investors regarded the oil storage facilities at Whiddy as an integral part of the plan and that the proposal might not proceed if the West Cork facility was not part of the deal.

Although Mr Lyons observed that the group and its bankers were becoming frustrated at their inability to get across their serious intent, he also acknowledged that officials were unconvinced by the Saudi investors including their secretive approach and “slow and cautious” way of working.

Ultimately the Government announced in March 1995 that the INPC was investing IR£18m to restore the Whiddy oil terminal following a devastating fire at the facility in 1979.