Business Irish

Monday 24 October 2016

Whitegate oil refinery operator gets $200m injection

Gordon Deegan

Published 18/08/2015 | 02:30

The Whitegate Refinery – the only one in the State – in Cork
The Whitegate Refinery – the only one in the State – in Cork

The firm operating the State's only oil refinery has received a cash injection of $200m.

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The increase in authorised capital in the US-owned Phillips 66 Whitegate Refinery is confirmed in documents lodged with the Companies Office.

Phillips 66 is the fourth largest non-government refiner in the world and its Whitegate refinery has a capacity to produce 75,000 tonnes of oil per day and supplies around 40pc of Ireland's fuel needs.

The refinery has operated in east Cork for 55 years. It was sold by the State in 2001, along with a crude and products terminal in Bantry Bay, to US oil firm Tosco, which was subsequently bought by Phillips which was then taken over by Conoco.

The cash injection will sharply reduce the deficit on the firm's balance sheet - at the end of December 2013, the firm had a shareholders' deficit of $230.29m.

Last year, Phillips 66 pulled the proposed sale of the Whitegate oil refinery as attempts to find a buyer failed.

At the time, Phillips 66 boss Greg Garland said: "In Whitegate, we gave it a good try. We had the asset on the market for more than a year and I would say we've got limited to negative interest in that facility."

The failure to resolve the refinery's long-term future is against the background of a contractual obligation between the Government and Phillips 66 to operate the refinery until July of next year.

Last month, Phillips 66 confirmed that it is considering selling the refinery, adding that, longer term, it expects that the "asset will be challenged".

The firm said options for the refinery included possibly offloading it or transforming it into an import terminal.

At the end of last year, globally, Phillips 66 had 14,000 employees and assets worth $49bn.

Fianna Fáil Finance spokesman Michael McGrath said last month he is "extremely fearful for the future of the refinery" once the obligation concludes, adding that its closure would have a devastating impact on jobs. The most recent accounts for the Whitegate firm show that numbers employed totalled 157 with staff costs at $30.5m.

In a Dáil response in the last Dáil term, the Minister for Communications, Energy and Natural Resources, Alex White, told Fine Gael's Jerry Buttimer that he was in regular contact with Irish and US executives of Phillips 66.

Mr White said officials from his department met with the Irish Petroleum Industry Association late last year to discuss the future of refining in Ireland.

In a separate response to Michael Moynihan (FF), Minister White said his most recent meeting with Philips 66 representatives was last April.

He said that they indicated that they remain committed to honouring their contract with the State to operate Whitegate to next year "and they are actively considering a number of options for the future of the refinery beyond that date. I understand that a potential sale is one the options under consideration".

The most recent accounts show that the Phillips 66 Whitegate firm that operates the refinery plunged into the red in 2013 to record pre-tax losses of $53.37m. It had pre-tax profits of $9.1m in 2012.

Revenues fell by 4.5pc or $140m to $2.94bn in the 12 months to the end of December 31, 2013. Cost of sales fell from $3.05bn to $2.9bn last year.

The directors' report stated that "the combined impact is that refining margins have been depressed and can be expected to remain so while Europe sees a supply and demand imbalance."

The report states that "in Ireland, the business has seen growth in its market share for transport and heating fuels".

Irish Independent

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