21 September 2000 Edition

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Enterprise Oil make a `clean' getaway


Hats off to the Fianna Fáil/Progressive Democrat coalition. They have squared the circle this week in showing just how to squander the Irish people's natural resources. The resource in question is the vast quantities of natural gas underwater off the west coast of Ireland.

This week, it was disclosed that Bord Gáis is to build a £100 million pipeline from the Corrib gas field in the Atlantic to the Mayo coast linking the newly found natural gas deposits into the Irish gas grid. At first glance this seems like good news. Natural Gas is a vital economic resource and the building of a pipeline into the west could, if managed properly, have a hugely beneficial effect on developing the economic potential of the West of Ireland.

However, there are still a range of unanswered questions about the project. We need to know how many jobs will be created for the long-term in the west? How many Irish companies and workers are going to used to drill the gas and bring it ashore? Will the pipeline be extended into the northwest?

None of these important questions have been dealt with, even though the Dublin Government have known of the huge gas deposits off our west coast for at least three years. The announcement of the Board Gáis deal with Enterprise Oil to pipe the gas ashore in Ireland is in fact the latest step in a process characterised by massive mismanagement of Irish economic interests for nearly a decade.

In the early 1990s, after intensive lobbying by international oil companies, the then Fianna Fáil/Progressive Democrat coalition agreed the most lax terms for oil exploration in the industrialised world. New licences for deep sea oil and gas exploration in the Finance Act of 1992 allowed the exploration companies to write off their exploration costs against tax when they begin to pump oil or gas for sale.

Most other states issuing such licenses impose a royalty levy on any gas or oil sold. In the Irish case, there would be no royalties paid to the Irish government. Instead, we have the bizarre case of having to pay Enterprise Oil, Statoil and Marathon for the gas they pump ashore, even though the gas technically belongs to the Irish people.

A special low rate of corporation tax, 25%, was also inserted in the legislation for the exploration companies. Enterprise Oil, who have the drilling rights of most of the Corrib field, have been lobbying for a year for a halving of the tax rate. Norway has a 75% tax rate on oil revenue.

Given the terms of the bargain with Bord Gáis for the new pipeline, a deal on the tax rate could well be likely. Enterprise Oil are to share the costs with Statoil and Marathon Oil of building this pipeline. However the oil companies' share could be covered by EU funds and IDA grants.

Bord Gáis will own the pipeline, while the exploration companies will own the gas running though the pipe. Bord Gáis will link the pipeline into the national grid, while also developing new links with Dublin, Galway, Limerick and Cork. This link will cost another £200 million. There is also the possibility of a new gas-fuelled power station in the West. The deal also allows Enterprise the right to enter the gas market themselves, selling their gas not just to Bord Gáis but to heavy commercial users also.

What the deal doesn't include is the best long-term development of the gas resource. Ireland as an economy needs a long-term supply of gas to plan a sustainable development strategy.

The size of the pipeline proposed (it will be five feet wide) signifies a rapid exploitation of the gas resources. This might be of benefit to Enterprise Oil and the other exploration companies but the rapid depletion of the gas resources could leave the economy dependent on supplies through the Irish Sea gas interconnector.

There is also the question of how many long-term jobs will be created through the exploitation of the Corrib gas field. For the past three years, Enterprise Oil have pursued a deliberate policy of having no Irish workers on their drilling rigs. Now the other companies have followed suit.

Padraig Campbell, an oil worker and SIPTU member, told An Phoblacht that with the right development ``a new Aberdeen could be built in the West''. He said that the West coast was one of the heaviest licensed areas in Europe and that a whole range of new oil and gas finds are possible. However, again the Dublin Government have shown little desire to fully exploit the potential of the gas find.

Bord Gáis have described the contract with Enterprise Oil as a ``clean deal''. It seems more likely that Enterprise have got clean away with our resources and with multi-million pound potential profits. At the same time the Dublin Government are congratulating themselves on a job well done. They may be able to fool themselcves, but it remains to be seen whether they can fool the people.

An Phoblacht
44 Parnell Sq.
Dublin 1