Wednesday 21 February 2018

Future of oil refinery in doubt as Texans plan to sell up and ship out

Analysts say chances of finding a buyer are slim and closure looms

Peter Flanagan

Peter Flanagan

THE future of the only oil refinery in the country was at risk last night after its US owner said it wanted to sell up and analysts warned that there was little chance of finding a buyer.

Texas oil firm Phillips 66 confirmed late on Tuesday that it intends to sell the Whitegate refinery in Co Cork. The refinery processes around a third of Ireland's petroleum supplies, and is considered a strategically important asset by the state.

However analysts have warned there was unlikely to be a trade buyer for the business, and that it may well end up shutting down.

"The odds of a buyer emerging look slim," said Seth Kleinman, head of energy research at Citigroup.

If the site does end up closing, Mr Kleinman said that would lead to worries about security of fuel supply for Ireland.

"Whitegate supplies about one third of Ireland's oil products, so it would leave a big hole to fill and has to raise questions about fuel security for the country," he said. A spokesman for energy minister Pat Rabbitte was unavailable for comment.

His words were echoed by Allen Good of Chicago-based investment company Morning Star.

"If it's not working for Phillips 66 [as a refinery], it's unlikely that it's going to work for anyone else," he said.

A potential buyer may look to transform the site from a refinery into a storage facility, he added. If that were to happen that would force Ireland to import all its fuel directly.

"If you look at key drivers of refining profitability – none are really favourable for Europe," Mr Allen claimed. Phillips 66, which is pulling out of Ireland completely, is also selling an oil and refined products storage terminal in Bantry Bay and its wholesale marketing business.

On a recent call with analysts, Phillips 66's executive vice president for refining said the firm may sell Whitegate, which was "not sophisticated" nor central to the company's business.

The sale is likely to cause a headache for the government, which has seen Whitegate as critical to Ireland's security of energy supply. The site also employs more than 200 staff.

As well as the immediate issues a closure would cause, it would also be a blow to Ireland's potential as a destination for oil and gas exploration.

The area around Whitegate has been cited as a potential hub for the oil industry if offshore drilling, such as Providence Resources' Barryroe Field in the Celtic Sea, come to fruition.

News of the sale of Whitegate contrasted sharply with comments from Mr Rabbitte at an Enterprise Ireland event earlier in the day, where he told some 70 companies how state agencies can help them access "major business opportunities linked to current oil and gas exploration" around Ireland.

At the event, which was co-organised by the supply chain management firm Achilles Group, Mr Rabbitte outlined the opportunities for Irish firms to win business linked to recent and future activity in offshore oil and gas.

"[Recent oil discoveries around Ireland] augur well in terms of opportunities for Ireland and business opportunities for Irish suppliers, and for jobs and related spin-off benefits.

"I urge Irish companies to demonstrate a robust commitment to health and safety, compliance and ethics, to maximise their chances of being selected for new business opportunities linked to these developments," he said.

Irish Independent

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