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30 September 2012 Edition

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€1.6trillion oil and gas giveaway

Multinationals plunder Ireland’s natural resources

“Decades of corrupt and poor government have allowed our natural resources to be handed over and exploited by others. At a time of economic hardship, for Ireland not to be benefitting from its natural resources is a scandal."

A NEW REPORT by campaign group ‘Shell to Sea’ has revealed how €1,600billion worth of oil and gas reserves in Ireland’s seabed have already been licensed to private companies, with the state gaining only a tiny fraction of the profits.

The report, Liquid Assets, finds that Ireland’s system of managing its oil and gas resources is “dysfunctional, out of step with the rest of the world, and heavily skewed in favour of private companies”.

Liquid Assets uses the value of oil and gas-fields as estimated by private companies themselves and reveals that they believe there is just under 21billion barrels of oil in Irish waters. While some private companies may be inclined to ‘talk up’ their expectations, the Department of Communications, Energy and Natural Resources said in 2011 that the Atlantic Margin (which extends from 30km to 380km off the west coast) contains “potential reserves of 10billion barrels” - which would represent around €750billion. The study also shows how out of step Ireland’s licensing laws are when compared with much of the rest of the world.

Irish consumers will still be forced to fork out top prices for oil and gas while at the same time resources off our coasts are exported directly to other countries. And while our mineral resources have been given away, the state still imports 90% of its energy needs.

Ireland’s licensing laws, changed in 1987 by Fianna Fáil Energy Minister Ray Burke (later jailed for corruption), rank among the worst in the world in terms of view of benefit to the state – and the public.

Liquid assets

Ireland only receives around 25% Corporation Tax on declared profits from licensed oil and gas companies. But as these companies can avail of a 100% write-off on costs incurred, including the cost of unsuccesful drills, the state’s tax-take comes nowhere close to this. While the exact numbers are not available, a former managing director of Enterprise Energy Ireland (before it was bought up by Shell) says that an estimate by energy consulstants Wood Mackenzie for Shell’s operation in Corrib in 2003 predicted that they would only have to pay €340million in taxes. This is the equivalent of just 3.6% of the Corrib gas field’s value according to the Department of Energy and Natural Resources. More recent estimates suggest that the state will receive around 7% in the future due to rising oil and gas prices.

The Irish state has completely failed to attach other terms on these licence agreements as is best practice in other countries. In Ireland, companies which extract oil or gas from our waters are not required to supply the Irish market, meaning they can export all of their oil directly from rigs without the Irish public ever seeing a drop. This completely negates the point made by people like Transport Minister Leo Varadkar who claim that encouraging and expanding offshore oil and gas exploration ensures ‘energy security’.

These private companies are also not required by the Government to give discounted rates to the state as happens elsewhere, meaning Irish oil and gas used in Irish homes is no cheaper to the consumer than oil imported from abroad. This is down to these private companies being allowed to sell it to Bord Gáis at the interntaional market rate. On top of this, the Government has failed to include any clause that would require these companies to source staff from Ireland. Some of the private companies involved in drilling have also announced their intentions to transfer oil directly from the fields to tankers at the rig and ship it to refineries overseas. This will result in no economic benefits to the state and no onshore jobs, no infrastructure and no supply to the Irish market.

Speaking to An Phoblacht, the Sinn Féin spokesperson on Natural Resources, Martin Ferris TD, said:

“Decades of corrupt and poor government have allowed our natural resources to be handed over and exploited by others. At a time of economic hardship, for Ireland not to be benefitting from its natural resources is a scandal.

“We need to reform the licensing and taxation regime. Existing oil and gas contracts need to be renegotiated.”

The Kerry North TD said Sinn Féin proposes that the state takes a 50% shareholding in these reources and introduces an immediate levy of 48% and a royalty of 7.5%.

“We also need to see a state oil, gas and mineral exploration company which would actively participate and invest in exploration.”

Read the full report at:

www.shelltosea.com/booklet

Sinn Féin’s policy paper

is available at

Our Natural Resources

GUE-NGL-new-Jan-2106

An Phoblacht
44 Parnell Sq.
Dublin 1
Ireland
 

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