The Government hopes to complete the $100 million (£85 million) sale of the assets of the Irish National Petroleum Company (INPC) to the US refining group Tosco Corporation within three months. Connecticut-based Tosco is the largest independent oil refiner in North America and is buying Whitegate, the Co Cork refinery and the oil storage facility on Whiddy Island in Bantry Bay from the company.
The Government will retain ownership of INPC which has debts of more than £106 million, according to the most recent figures. Much of the debt was run up by the group in recent times in bringing the Whitegate Refinery up to European environmental standards. The State will also retain INPC's strategic oil reserves, valued at £61 million, according to the Minister for Public Enterprise, Ms O'Rourke.
The Government could face a hefty bill to buy the co-operation of INPC's staff. Tosco has agreed to offer employment to all the company's workforce at existing terms, conditions and pension rights. The group will make Dublin its European headquarters.
A spokesman for the Department of Public Enterprise said yesterday that the discussion with INPC employees will begin shortly. He said that although Tosco encourages share ownership by employees the nature of the sale did not offer any scope for direct employee participation but other models would be looked at. It is expected that staff will be offered a financial incentive to leave INPC and join Tosco.
RTE staff who went through a similar process when Cablelink was sold to NTL last year got payments of around £40,000.
INPC began looking for a strategic partner last year having failed to find one on two previous occasions in the last eight years. The company said yesterday that it had discussions with 30 companies before settling on Tosco.
Tosco will now enter into exclusive negotiations with INPC to resolve a number of outstanding issues. This will include a due diligence process as well as an environmental audit.
The US group has given a commitment to operate the facilities, which employ more than 220 people for at least 15 years. This will involve a substantial investment to allow the refinery meet additional European directives on environmental standards.
Tosco is quoted on the New York and Pacific stock exchanges. It has an annual turn over of $20 billion and made profits of $442 million last year. It operates three refineries on the US East Coast and another three on the West Coast. It processes 1.25 million barrels of oil a day at the six refineries and is in negotiations to acquire a seventh in Louisiana. The assets of INPC, which processes 75,000 barrels a day, will be its first acquisitions outside of the US.
INPC yesterday released its annual report for 1999 which showed that the state owned company made a pre-tax profit of £2.9 million last year on sales of £287 million. This compared with profits of £8.9 million on sales of £227 million last year.
The strength of the dollar, which was up 16 per cent and higher oil prices were responsible for the increase in sales although the amount of oil refined fell to 2.8 million tonnes.
Oil companies operating in Ireland are required to buy 20 per cent of their needs from Whitegate under what is called the Mandatory Regime. This requirement will now be ended according to Ms O'Rourke. INPC also holds the State's strategic oil reserve, valued at £61 million, through its National Oil Reserves Agency operation which will not be sold.
