John Whelan: As Ireland's oil imports continue to grow, falling prices ease the pain

Irish Examiner

5 hours ago

The calm after the storm of US airstrikes on Iran, has taken many by surprise, in particular the oil market producers.
But, there is the continued worry that this may only be a lull, in which Tehran considers their options for retaliation.
The most powerful of their options is to blockade the Straits of Hormuz, through which 20% of the world's oil flows, which based on prior middle east conflicts could double the price of a barrel.
There are other options, including getting Russian backing for a joint military move on Israel and US assets in the region and creating a full scale middle east war.
Despite the many unanswered questions, oil prices continued their downward trend, assisted by the continuation of the flooding of markets by the Organization of the Petroleum Exporting Countries led by Saudi Arabia, who control the bulk of oil produced and traded globally.
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The European Commission's Spring Economic Report forecasts crude oil prices to continue to fall throughout the current year and into next year with Brent crude oil prices averaging $59 (€50.10) per barrel.
After the April Trump tariff announcement, Brent prices dropped 16% in less than a week.
The oil prices in euro terms were lower, as the US dollar has fallen in value since Trump's inauguration.
This is all good news for businesses and consumers in Ireland, who are totally dependent on foreign oil supplies, as Ireland does not produce any of its own.
Remarkably, despite all the push to produce energy from wind farms and solar panels, as well as the emergence of electric vehicles, Ireland imported substantially more oil in 2024 than in 2014.
The 54% growth in oil imports over the 10 years was driven primarily by increased energy demand arising from Ireland's population and economic growth, and the decline in domestic oil and gas production.
Demands for energy have also changed, in particular through the development of the digital economy and the associated data centres and their significant electricity usage.
This increased demand has been met by greater reliance on imported oil and gas, as domestic production from fields like Kinsale has decreased, and the Corrib field's output is running down and expected to be depleted by 2026.
As a consequence, gas imports have increased by 72% over the 10 years to the end of last year.
Ireland has made some progress in transforming the electricity system through the deployment of wind farms, with renewable energy currently providing more than 40% of electricity used.
However, electricity represents only one-fifth of Ireland's energy use, and our transport and heating systems remain heavily reliant on fossil fuel systems.
Local supply of biomethane to replace fossil fuels
Gas Networks Ireland's director of customer and business David Kelly maintains that they have made great strides in the last few years, in enabling the move away from fossil fuels and replacing these with the local supply of bio-methane.
He points to Gas Networks Ireland's new Central Grid Injection (CGI) facility in Mitchelstown as a key step in supporting Ireland's transition to renewable energy.
This €32m investment will enable the injection of biomethane into the national gas network, providing an essential connection point for biomethane producers.
Once fully operational, the facility is expected to reduce Ireland's CO2 emissions by approximately 130,000 tonnes annually.
Biomethane injected through the Mitchelstown CGI will contribute around 12% of the Government's 2030 target.
Commissioning of the first phase is expected in early 2026.
As part of Ireland's commitment to reduce emissions by 51% by 2030, the Government's Climate Action Plan sets a target for biomethane to be generated from an estimated 200 plus agri-based anaerobic digestion biogas plants to be constructed and commissioned over the next five years.
As part of the adoption of the EU's Recast Gas Directive and Regulation, the plan is laying the groundwork for an energy system increasingly defined by decarbonised gases and pure hydrogen.
However, existing gas networks, in Ireland and across the EU, will face massive challenges transitioning to accommodate the more low-carbon gases, and some will inevitably need to be decommissioned.