Republican News · Thursday 14 March 2002

The great oil and gas rip-off

Ray Burke, against the advice of civil servants, met with the oil companies and completely changed the philosophy of the oil and gas legislation. He got rid of Ireland's 50% stake in a discovery; abolished royalties and introduced massive write-offs for the oil companies

Many Irish people do not realise that Ireland has potentially the largest oil and gas reserves in European waters. Ireland's west coast is on the Atlantic Margin, an oil and gas rich geological spine that runs up as far as Norway. But the oil companies know it! So also do some Irish politicians and civil servants, who have allowed this precious resource to be stolen from under our noses.

In 1970, a large gas field was discovered in the Celtic Sea off the Cork coast. Cork benefited from the discovery, to a large extent, with offshore and onshore jobs, goods and services provision, although Marathon Oil, who were handed the rights to the gas, made massive profits.

Throughout the 1970s, 1980s and into the 1990s, the oil industry built up a huge geological picture of Ireland`s hydrocarbon resources all around our coast.

Irish oil rig workers reported (in vain) that many so-called "dry holes" were in fact oil and gas discoveries whose potential was ascertained by secret tests carried out by the oil companies. There are no government officials on oil rigs operating in Irish waters , leaving the state completely dependant on what information the oil companies choose to give them. In 1975, Justin Keating, the Energy minister, introduced oil and gas exploration tax terms and conditions to protect Ireland's interests in the event of any (declared) commercial finds . There was a tax rate of 50%; an automatic 50% stake by the state in any commercial well and royalties of 6%-7%. There was also an understanding that Ireland would benefit from the economic spin-offs from oil and gas exploration.

Due to a world slowdown in exploration and production, Dick Spring in 1985 modified the 1975 terms to allow for a sliding scale of royalties and state participation, while at the same time protecting Ireland`s interests.

Although there was no deep-water production technology at this time (the mid-'80s), Ray Burke, against the advice of one of the most senior civil servants in his Department, met with the oil companies and completely changed the philosophy of the oil and gas legislation. He got rid of Ireland's 50% stake in a discovery; abolished royalties and introduced massive write-offs for the oil companies.

In 1992, Bobby Molloy, after being lobbied again by the oil companies, reduced the oil/gas tax rate to 25%, the lowest in the world. 100% write -offs were introduced for the oil companies and so-called "Frontier Licenses" were introduced that allowed the oil companies up to 20 years to hold a license on a particular offshore block, i.e. a designated drilling location.

In 1995, Michael Lowry issued many of these licenses to among others, Enterprise Oil, a company formed in Britain in 1983 which moved to Ireland in 1984 and commenced serious lobbying of politicians and civil servants. Enterprise Oil now owns the largest amount of licenses in Irish waters, including the massive Corrib North gas field, part of a geological structure 20-30 times the size of the Kinsale Head field and worth countless billions of euro. This gas discovery in 1996 was their first drilling operation in Ireland since their arrival in Ireland 12 years previously. Enterprise Oil refuses to allow Irish oil rig workers and they continue to insist that the Corrib Field is only two thirds the size of the Kinsale gas field! They also have outsourced the bulk of their hugely lucrative goods and services out of Scotland.

Ireland`s area of water for oil and gas exploration covers 660,000 square kilometres, which is nearly TEN times the land area. Sadly, as things now stand, the oil companies completely control our hydrocarbon resources. Enterprise Oil is a significant corporate donor to Fianna Fáil.

Apart from the supremely generous tax write-offs given to the oil companies, the Fianna Fáil-led Government asked the Corrib North Consortium consisting of Enterprise Oil, Statoil and Marathon Oil to re-route their gas pipeline from going directly east to Dublin and instead route the pipeline to Galway, thereby creating the illusion that the market towns of Mayo and Galway would get gas. Enterprise and its partners agreed to this on condition that the State, i.e. the Irish taxpayer via An Bord Gais pays for the pipeline. The government readily agreed to this request.

Minister Frank Fahey in 2001 gave Enterprise Oil a petroleum lease which gives ownership of Ireland`s West Coast gas to them and their partners. This was given even though there was a Bord Pleanála appeal pending taken by residents of the Erris region of north Mayo who are objecting to a massive outdated gas production facility being foisted upon them by the oil companies and the State. Mayo County Council gave questionable planning permission to the Consortium.

Maybe some day the Irish people will cry halt to this massive scandal and demand that the Irish people benefit from this precious resource. However with good friends in both RTE and TV3, the oil companies are confident that they can get away with this massive rip-off. The best way to handle our hydrocarbon resources is for the state to follow the Norwegian model and manage our own exploration, development and production. Instead, however the state sold the Irish National Petroleum Corporation to a discredited American oil company called Tossco for a pittance.

In the 2001 Budget, 25% Corporation Tax was reduced to 16.5% which will finally be reduced to 12.5% at the behest of the oil industry! Norway`s oil/gas rate is 78%, with a 7% royalty rate. There is a 50% automatic state stake in any discovery. The oil companies have to use Norwegian jobs, goods and services. The oil companies must also contribute to an oil savings fund for future generations of Norwegian people. And the oil companies still find worth their while to operate in Norwegian waters!

SEÁN ac COISTEALBHA
SINN FÉIN CANDIDATE
GALWAY WEST