Sale of Ireland's only oil refinery is understood to be a done deal
Published 27/07/2016 | 02:30
The sale of the country's only oil refinery - at Whitegate in Cork - is understood to have been effectively sealed by US owner Phillips 66.
The refinery has been up for sale on and off by Texas-based Phillips 66 since 2013.
It was reported in May that a deal to offload the refinery would be announced within weeks. It's believed the sale has now been agreed.
The company announces second-quarter results on Friday and could be in a position then to confirm the sale to investors.
A spokesman for Phillips 66 declined to comment beyond a statement the company made previously.
"We anticipate closing during the second half of 2016 if appropriate value is achieved and after customary government approvals," he said of the sale.
Family-owned Canadian firm Irving Oil has been touted as the front runner in the tussle to buy the refinery, which can process up to 71,000 barrels of oil a day.
Other interested parties in the asset were reported to be ArcLight Capital, Valero Energy and UK-based PTFPlusOne.
The refinery is directly owned by an Irish firm which is a subsidiary of a UK-based Phillips 66 company.
In 2014, Phillips 66 had pulled a planned sale of the refinery. The group's chief executive, Greg Garland, said at the time that the company had had "limited to negative interest" in the facility.
Just over a week ago, the Minister for Communications, Energy and Natural Resources, Denis Naughten, confirmed in the Dáil that the sales process was on-going.
He pointed out that as part of the deal by the State to sell the refinery in 2001, the owner had a legal obligation to operate the facility until at least July this year.
"The Government views the continued operation of the Whitegate refinery on a commercial basis as highly desirable from an energy security and economic perspective," the Minister said.
"Security of supply remains a fundamental tenet of our energy policy and our overarching strategic energy security objectives," he added.
Ireland is obliged under EU and other rules to maintain oil reserves equivalent to 90 days of Ireland's normal requirements. Those reserves amount to 70,000 tonnes of crude oil and just over 1.5m tonnes of refined product.
About one third of those emergency reserves are held abroad, and the remainder in Ireland, including at Whitegate.
The refinery currently supplies between 30pc and 40pc of the requirements of the Irish retail market, excluding jet kerosene.
However, it's very possible that Whitegate's role as an active refinery will cease when the new owners take charge.
Low refinery margins and Whitegate's lack of strategic importance to a new owner mean it could be destined for use as a storage facility.
That will have significant implications for the 160 full-time employees and 130 contractors that work on the site.
Irving Oil is based in St John's, Newfoundland.
It was founded in 1924, and operates Canada's largest refinery, in New Brunswick.
Over 80pc of the refinery's production is exported to the United States, and it accounts for 75pc of all Canada's petrol exports to the US.
The group is also involved in other downstream oil activities, including the operation of over 900 retail forecourts in Canada and the United States.