7 July 2005 Edition
Real scandal behind Ros Dumhach 5 jailings
BY ROISIN DE ROSA
Government's criminal squandering of national resources
Few have a conception of the size of the government's treacherous sell-out of national Irish gas and oil resources over which Des O'Malley, Ray Burke, Bobby Molloy, Michael Lowry, Frank Fahey, Dermot and Bertie Ahern, and now Noel Dempsey, have presided.
The Corrib gas field is merely the flagship for a major development of gas and oil reserves which reach along the Atlantic Margin from the coast off Kerry right up past Rockall, to Scotland and the Grampian oil field, the Hebrides, the Orkneys and the Shetlands, to the North West Coast of Norway.
Nevertheless it is a key flagship development, where the technology of an on-shore recovery plant, though as yet untried, has low-capital costs and is crucial to the multinational firm Shell in the exploitation of what are likely to be huge reserves lying off the entire Irish coast. The consortium owns the exploration licences in Irish coastal waters of 660,000 square kilometres- ten times the size of Ireland.
The Corrib development will ensure for Shell and the consortium the ownership, processing and sale of an unimaginable chunk of the world's supply of gas and oil, to Europe and beyond, processed by the cheapest method, on shore in Mayo, with no appreciable local jobs, no return to Irish owners of the resource, with Irish taxpayers through Bord Gáis paying for the transportation pipeline right to the gas interconnector, with what little servicing of the off shore-rigs, carried out from Ayr, in Scotland. The consortium will sell our own gas back to us in Ireland, with no contribution whatever to Ireland or the economy.
Scale of the development
The example of Norway shows the scale of what is at stake in the campaign at Corrib. Norway has become the second largest exporter of crude oil worldwide, after Saudi Arabia. The Norwegian continental shelf will continue as a major source of natural gas for the next 100 years, ensuring the economic strength of that economy, which remains outside of the European Union.
Corrib itself is just one part of that development of the Atlantic margin, much of which lies off the coast of Ireland.
Estimates of the value of the reserves at Corrib alone are between five and seven Trillion Cubic Feet (TCF). It is reckoned that each TCF represents a value of €3 billion, which leaves out of account the downstream servicing required to recover and process this gas: of manufacturing: ship and rig construction, infrastructural development of service ports, refineries, petro-chemical industries, amounting to many thousands of onshore and off shore jobs. Imagine this developmental in the context of Ireland, and the rural regeneration of the Western and Northern sea boards.
This is the resource that the Dublin Government, on behalf of all the people of Ireland, has given away over the past decades to the Shell-Statoil-Marathon consortium, for nothing except perhaps their own sycophantic personal gratification at doing what they are asked to do, or perhaps in return for the casual dispensing of carefully selected brown envelopes to gurriers — allegedly via the FF Galway races tent.
This is the incompetence or indeed corruption that the Mayo people and the five imprisoned small holders are demanding be investigated and re-negotiated before any further operations at Corrib proceed. This is the scale of the battle that the people of Mayo have joined on behalf of all of the Irish people — against corruption, or incompetence at the highest levels of government
History of the sell out
The scandal began with Des O'Malley in 1967 who gave the Ireland oil and gas rights in shallow waters to Marathon Oil for £500 in perpetuity. In 1971 the Kinsale Head gas field was found. All licenses are sub-let from Marathon Oil — a Texas-based company, which owns 18.5% of the Consortium.
In 1975, Minister Justin Keating agreed terms for oil and gas exploration with 50% tax levy and gave the state the right to an automatic 50% shareholding in the find and royalties of 6 to 7%.
Although this was subsequently altered by Dick Spring, in 1985, a national stake and financial return from future commercial exploration were protected.
Ray Burke's inexplicable change
In 1984, Enterprise, a company formed only the year before by, amongst others, Denis Thatcher, husband of then British Prime Minister Margaret Thatcher, began lobbying to re-shape the State's oil and gas agreements. Over the subsequent three years, and against the advice of his Department, Fianna Fáil Minister Ray Burke abandoned the 50% Government stake in any commercially successful find — the stake in our own national resources — and abolished payment of royalties
In 1992 Bobby Molloy, with Bertie Ahern as Minister of Finance, after intense lobbying by oil companies, agreed a tax rate of 25%, thought to be the lowest anywhere in the world for oil and gas exploration. Furthermore this tax could be written off against all commercial activity, developmental and recovery costs, going back 25 years, and not even restricted to exploration in Irish waters.
And in the same year, the government introduced 'Frontier Licenses' which allowed oil companies to hold a licence for up to 20 years on a drilling location. This means that a company can sit on development of the field, watching market prices, as well as technological development.
If, as is widely believed in the industry, that the oil exploration giants, in the Middle East, have grossly exaggerated their oil reserves, then expectations of price increases, far in excess of those resulting from current war on Iraq, are worth waiting for. Sitting on frontier licences is a paying game.
Enterprise picked up the bulk of these licenses off Michael Lowry, including the Corrib North gas field. The Corrib find is part of a geological structure up to 30 times the size of the Kinsale Head find. Enterprise Oil UK made the massive gas discovery, believed by industry sources to the biggest find yet in European waters. Marine Minister Frank Fahey awarded the petroleum lease to the consortium.
It was Fianna Fáil Minister Frank Fahey who sold the 500 acre site, owned by the State company, Coillte, at Bellinaboy, for an undisclosed sum, to Shell, upon which development for the recovery station has now begun.
Shell takes over
The shareholders of Shell and the Royal Dutch company, formally unified their operations just last week and these are valued at £125 Billion.
Shell spotted Enterprise's position and in April 2002 made a successful and hostile bid for Enterprise Oil UK. Shell bought out Enterprise Oil for £4.7 billion. For that sum, it got not only the Corrib gas field, worth between Ä15 and €21 billion, (for an overall initial capital investment reckoned by Shell to be €634 million) but also the Enterprise owned 'frontier licenses' to develop, as they choose, the huge oil and gas reserves in the Atlantic Margin, the rights to which were sold by O'Malley to Marathon Oil. (18.5% share of the consortium). The consortium has it sewn up, except for Mayo people and their supporters in Jail, whose objections to the raw gas pipeline cross their lands, is a major spanner in Shell's low cost designs.
Is the Bellinaboy Terminal to be the hub for exploration and recovery of the huge reserves Enterprise got the rights to develop along the Atlantic Margin? That surely will at least bring jobs.
Enterprise had consistently refused to employ Irish workers on the rig they hired for appraisal of the Corrib field. As oil rig worker Pádhraig Campbell has pointed out over the years, this was because Enterprise did not want any one overseeing the results of their appraisals. So what jobs will come out of the proposed development by the consortium?
The oil industry has made clear that it intends to use their long established Scottish oil and gas industrial infrastructure as a base for their Irish operation via the port of Ayr. Astonishing as it may seem, Enterprise were allowed to operate in Irish waters while using another jurisdiction as a base. The massive spin-off, estimated to be worth at least €1 billion, that it will take to develop the Mayo operation, will be spent in Scotland, where already the infrastructure exists.
But that is dependent upon the on-shore raw gas pipeline to the processing recovery station on shore. And this, above all else, is why Shell is so determined to build its recovery station on shore, and not, as has been the practice to date, at sea.
The running costs of the terminal, which Shell might intend, in the longer run, to be the low cost hub for processing of reserves all along the Atlantic margin, will require only a few jobs — an amazing coup for Shell. Only the five Mayo men in jail are standing between them and success in ensuring that Shell gets their facilities cheap, at very low-running costs.
As Caitlín ní Sheighin said at last Friday's Press conference in Dublin, the Shell CEO reported to a meeting with them, that there should be only 27 jobs on the Bellinaboy recovery terminal. As Pádhraig Campbell points out, these will be highly-skilled jobs, most likely drawn from personnel employed by Shell from outside Mayo.
Meanwhile the Consortium will be selling our gas back to us at going prices, but they may also be selling, through the two interconnections now installed to Britain and through to the continental grid, gas to supply the huge and hungry markets of the EU which in the coming decades may expect to be very eager for gas and oil, as Middle Eastern reserves run short and China looks to meet huge and exponentially increasing demand.
Ireland will indeed be a world player, on a world stage, but denied, by Britain again, the right to exploit our national reserves, this time through the collusion of the Dublin Government, and the sycophancy, dereliction of duty and skulduggery of its Ministers.
Unless of course the Mayo people's campaign, and the five men in jail, bring those responsible to book, review the contracts and stop the government and oil companies colluding further in the theft of Irish national gas and oil resources.
There is much at stake for the Irish people in the campaign over Corrib and it is not just getting the 5 determined and brave people out of jail. Minister Dempsey has to be stopped in compounding the felony of previous incumbents of the Department of Communications, Marine and Natural Resources.