The State's only refinery - at Whitegate in Cork Harbour - is to be upgraded at a cost of £70 million.

The news follows yesterday's Cabinet meeting, after which the Minister for Public Enterprise, Ms O'Rourke, said that the Irish National Petroleum Corporation would use its own funds to make a serious investment in the refinery and to allow it to produce more advanced fuel oils in accordance with EU laws. The INPC, a semi-state organisation, operates the refinery and will not seek any monies from the Exchequer to make the new investment.

From January 1st next, new and more stringent laws will come into place among the new countries.

The laws will require refineries like Whitegate to produce more eco-friendly fuels and the investment just announced is aimed at achieving that result.

The Cork-based refinery employs 150 people and produces 40 per cent of the Republic's fuel requirements.

The latest investment is seen as a major stimulus for the east Cork economy. Under the mandatory regime required by the Government, every £25 petrol fill-up in a car nets the State 10p. A spokesman said last night the fear was that if Whitegate was not up-graded, it would fall behind other smaller European refineries and would experience severe difficulties.

Before the INPC took over the refinery some decades ago, its future was very much in doubt, and at one stage the question was whether or not it could survive.

However, following other upgrading phases, the INPC turned its fortunes around and the refinery has played an important role in giving the State stability in terms of fuel.