INPC in a possible takeover bid

The Irish National Petroleum Company is in talks which could lead to a takeover of the State-owned oil refining business.

Mr Ed O'Connell, the chairman of the company, has confirmed that negotiations with a number of prospective partners are in their final stages and the company would shortly be making a recommendation to the Minister for Public Enterprise as to its preferred option.

INPC owns the Whitegate Oil refinery in Cork and also the Widdy Island terminal in Bantry Bay. The company had fixed assets of £101 million (€128 million) and net assets of more that £64 million according to its most recent annual report, but the asset figure includes a 90-day strategic oil reserve which Ireland must hold under EU law. Its borrowings was just under £50 million. The corporation made a profit of £4.3 million in 1998, the most recent year for which figures are available, on a turnover of £227 million. Higher oil prices and the huge increase in demand as a result of the number of new cars on the road point towards higher profits being announced when INPC publishes its 1999 report shortly.

Earlier this year the company hired KPMG, the international accountancy practice, to advise it on a search for a strategic partner. More than 35 companies expressed interest and INPC went to the next stage of discussions with around 15, said Mr O'Connell. The company sought proposals that would allow it to expand outside its traditional oil refining role into areas such as power generation and petrochemicals. Discussion are now taking place with two or three possible partners, said Mr O'Sullivan. A final decision will be made by the middle of next month, he said.

The chairman refused to say what proposals were now on the table. Mr O'Connell did not rule out a full takeover of the company or the sale of a majority stake. The corporation already has an agreement with Statoil to process significant amounts of crude oil for them and the Norwegian company is seen a likely bidder. Other offers are understood to have been made by energy companies hoping to sell the power generated as part of the oil refining process. INPC already operates its own power plant at Whitegate.

The INPC refinery at Whitegate is small by European standards. Its maximum throughput is 75,000 barrels of crude oil a day compared to the 200,000 to 300,000 barrels a day that are processed by most modern refineries.

It currently provides 40 percent of the petrol sold in Ireland as the major oil companies are required to buy 20 per cent of their petrol from the INPC. The mandatory regime, as the arrangement is called, adds only 0.2p to the price of litre of petrol and ensures the viability of the refinery, according to Mr O'Connell.

The strategic oil reserves, valued at £17 million in the last annual report, could be split off in any sale. They are nominally held by the National Oil Reserves Agency which is itself a subsidiary of the corporation.