Wednesday 22 November 2017

Phillips 66 pulls out of sale of Whitegate oil

Deutsche Bank unable to smoke out buyers for Cork site

OIL AND WATER: Whitegate refinery, in east Cork. Photo: Provision
OIL AND WATER: Whitegate refinery, in east Cork. Photo: Provision
Nick Webb

Nick Webb

Phillips 66, the US oil company, has pulled the sale of Ireland's only oil refinery at Whitegate in Cork as attempts to find a buyer failed.

Last June, Phillips 66 hired Deutsche Bank to help sell the refinery. However, despite smoking out several potential suitors, the company and its advisers were unable to seal a deal.

Phillips 66 will continue to operate the refinery in Cork, although it may seek to offload a nearby storage facility in Bantry Bay. Around 200 staff are employed by Phillips 66 across its Irish operations

"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," according to Phillips 66 boss Greg Garland.

"I will say this, we had quite a bit of interest in Bantry Bay. And so we've talked with the Irish Government, we've laid down the sales process for the refinery. We are going to continue with the second step in terms of the Bantry Bay assets and so, I would expect that by the end of this year, we may do something on Bantry Bay. We are obligated to run the Whitegate refinery through 2016, mid-2016 I think. And so we'll make a decision on the future where we go at Whitegate," he told investors last week.

The hurdle for investors was that the Whitegate refinery needs modernisation, and few potential buyers were believed to be prepared to fund a major investment programme with continued uncertainty over the viability of similar facilities.

European refineries have struggled financially because of overcapacity. US refineries have a significant cost advantage due to cheaper natural gas prices. Last year, Phillips 66 refining chief Larry Ziemba described Whitegate as "small, not sophisticated, and can't really compete in Europe".

The Whitegate refinery has operated in east Cork for 55 years.

However, recent years have seen its future regularly under threat and there have been fears that the refinery would be mothballed if it could not be sold.

Whitegate 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.

Whitegate supplies around one-third of Ireland's oil and is of significant strategic importance, especially with regard to energy security.

"The threat to Whitegate's future has serious implications for Ireland's energy supply and consequently for our economy," said Fianna Fail leader Micheal Martin last year.

Energy and Communications Minister Pat Rabbitte said last year it was "highly desirable" that the country's sole refinery should continue to operate.

Sunday Indo Business

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