Michael Connarty
Labour Member of UK Parliament - Linlithgow and East Falkirk Constituency
Michael Presses Minister on Oil Refinieries
Michael Connarty: To ask the Secretary of State for Energy and Climate Change what assessment he has made of the effect of environmental legislation on (a) the competitiveness of and (b) levels of investment in oil refining. [50428]
Charles Hendry: There are a range of factors that determine competitiveness and levels of investment in oil refining. An assessment conducted for DECC in 2009(1) concluded that low returns and weak demand growth had led to a lack of discretionary investment in UK downstream oil infrastructure with most investment being made to comply with safety and environmental regulatory requirements. The main incentive to invest is potential financial return, but the lack of demand growth and the competitive nature of the market constrain these returns in the UK. Nevertheless, reducing regulation is a key priority for the coalition Government, and we are working to eliminate the avoidable burdens of regulation and bureaucracy, and to improve European regulation and to reduce the burdens it imposes. We fully recognise the importance of a level playing field within the EU given the cost and operational challenges to oil refining that environmental legislation can bring. We will also continue to encourage businesses to manage and use natural resources in a sustainable manner and reduce waste, supporting a strong and sustainable green economy.
(1) Website as follows:
http://www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/resilience/downstream_oil/improving/improving.aspx
4 Apr 2011 : Column 624W
Michael Connarty: To ask the Secretary of State for Energy and Climate Change what estimate he has made of the minimum number of oil refineries in the UK necessary to ensure security of fuel supply. [50429]
Charles Hendry: The Government recognise that the retention of a refining sector in the UK offers benefits in terms of security of supply (balancing the risks between crude oil and refined product markets) as well as wider socio-economic benefits. It is Government's role to create the best conditions to ensure that the UK's demand for petroleum products continues to be met; at present, this is done through a balance of indigenously manufactured products and imports. We need to recognise the changes taking place in terms of refined product supply and demand, and that a mix of product refined in the UK and imports and exports will play a continuing role in the UK's downstream oil market. Industry and the market are best placed to determine the appropriate number of UK-based refineries and we have been encouraged by recent inward investment into the UK refinery sector.
Michael Connarty: To ask the Secretary of State for Energy and Climate Change if he will place in the Library a copy of each of his Department's internal studies on the future of oil refineries in the UK. [50430]
Charles Hendry: In 2009, a study carried out by Wood Mackenzie, on behalf of DECC, on the resilience of the downstream oil sector was completed and has been available on DECC's website. Further work on the resilience of the sector to a variety of potential disruption events was conducted by Deloitte LLP in 2010. I will place a copy of these reports in the Libraries of the House. A study on the competitiveness of the UK's refining sector is under way, and I will also place a copy of this study in the Libraries of the House when complete.
Michael Connarty: To ask the Secretary of State for Energy and Climate Change what plans he has for future support to the UK oil refining industry. [50426]
Charles Hendry: The Government recognise the important role that the UK's refining sector plays in the economic life of the country. The Government seek to ensure that the right conditions exist to attract and retain investment in the UK's refining sector. We work closely with the downstream oil industry and its representatives to understand the impact of policy on the sector and to ensure this understanding is shared across a range of Government Departments.
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