PROFITS at the Irish National Petroleum Corporation fell to £700,000 for 1995 from £2.3 million. But the company is making progress towards becoming fully commercial and an effective competitor in the market by the beginning of 1997, according to chairman Mr Ed O'Connell. These plans were proceeding against a background of a difficult environment for oil refineries, he warned.

INPC operates the Whitegate oil refinery and the Whiddy Island oil storage terminal and set up a subsidiary in 1995, the National Oil Reserves Agency (NORA), to administer the State's strategic oil reserves. Mr O'Connell's comments came in the company's annual report for 1995.

The 1995 results show that despite an eight per cent rise in turnover to £220 million, profit before tax fell to £700,000 from £2.3 million. The company attributed the drop in operating profit from £2.7 million to £1.2 million to two factors: a lower volume of crude oil processed due to the closure of processing units as part of the INPC's three year investment plan and an increase in volumes required for the mandatory system. Under the mandatory system Irish-based oil companies are required to take a proportion of their requirements from Whitegate until 1997.

While margins were positive in 1995 they remained low despite a continued high level of refinery utilisation in Europe, Mr O'Connell said. Stating that the company was now better equipped to deal with difficult market conditions, Mr O'Connell said the company needed to intensify its efforts to increase revenue and reduce costs.

"While the refining industry is having a difficult time at present, which is affecting all refineries in Europe, we are pleased at the extent of our progress over the past three years", Mr O'Connell said.

A total of £2 million was invested in 1995 and capital projects were completed on time and within budget, he said. "The continuation of investment through 1996 will see the refinery become an effective competitor in the market", he added. The investment programme is due to be completed by year end. "Work is well in progress towards converting our customers mandatory quota contracts for 1997", he added.

The company's investment programme has increased production to 52,000 barrels a day and improved technical capacity, flexibility and cost management, Mr O'Connell said. Three years ago30,000 to 35,000 barrels per day were being processed he said.

Chief executive Mr Fergus Cahill said that production of environmentally friendly low sulphur diesel commenced three months ahead of schedule indicating the new flexibility achieved at the plant.

The 1995 results show an increase of £100,000 in the net interest charges. Bank loans and overdrafts rose by £10 million while shareholders funds rose by £9 million to £40 million. Fees shared between the 11 directors increased to £43,000 from £38,000 while payroll costs increased to £6.8 million from £6.6 million. The average employment in 1995 was 210 people.