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"Difficult to justify" oil refinery in Ireland - study

The study, commissioned by a government department, said that overall oil demand has declined since 2006.

A STUDY INTO the case for an oil refinery in Ireland has found that the country doesn’t need to have one as it can import enough to meet its needs.

Plans have recently been announced to sell country’s sole oil refinery plant, Whitegate. The new study was commissioned by the Department of Communications, Energy and Natural Resources.

Demand

The study noted that overall oil demand has declined since peaking at 11.8 million tonnes in 2006 for the island of Ireland. After falling between 2007 and 2009, current demand for refined products is estimated to have risen to 9.8 million tonnes. It sees moderate future growth in oil demand reaching between 9 and 10 million tonnes per year by 2030.

It has forecast there will be a shift in demand for transport fuel from gasoline to diesel.

The study says that it does not foresee oil demand returning to the peak levels seen in the last decade.

Our outlook for oil demand would not in itself support a need for increased refinery production over that seen in the past.

In conclusion, the report says that the strategic case for refining on the island of Ireland is “not a simplistic choice between having or not having a refining asset”

Changing circumstances

It noted that Whitegate refinery has adapted to changing circumstances since it was constructed. However, it is challenging to envisage a case whereby the refinery could economically and competitively assume a primary role in satisfying the majority of oil demand on the island, said the study.

It said it is difficult to justify an ideally sized refinery even if it was located within the area of highest demand. This is due to a number of reasons, including that oil demand is forecast to remain stable and, if policies are realised, to ultimately decline substantially below current levels.

Plus, Ireland has for some time sourced the majority of its oil through imports.

A process of consolidation is underway within the European refining market, and also there appears to be little appetite at European level to consider Ireland a a special case for needing its own refining assets.

There is no imperative for the island of Ireland to have its own refining assets and the current infrastructure would be capable of supplying the required product imports.

It also said that if Whitegate ceased operations as a refinery, it could continue as a terminal at its current level of inland throughput.

The study recommends the oil supply infrastructure on the island of Ireland should be kept under regular review.

Minister Rabbitte

Speaking to Morning Ireland on RTÉ Radio 1, Minister Pat Rabbitte said that there is an agreement that places an obligation on Whitegate until 2016 to continue to provide product for the domestic market. He said that the department felt it was important to be proactive and take expert advice from international consultants at this stage as to whether the country continues to need its own refinery.

The Minister noted that five years ago, 46 per cent of Ireland’s necessary stocks were outside of Ireland, whereas now we have 73 per cent of the stocks in Ireland.

He said that he doesn’t know whether or not the owners of Whitegate will be successful or not in trying to sell it. If they don’t sell it, “I presume life goes on as before”, he said.

Whitegate is a private company and has legal contracts with the Government.

Read: New oil discovery by Statoil in North Sea>

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