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Gas valued at €420 billion off the west coast of Ireland, while Fianna Fáil speeds us towards the IMF

By: 
Conor McCabe - Dublin Opinion

Just a quick post to highlight the Shell to Sea factsheet, that there is €420 billion worth of natural gas of the coast of Ireland - all of which has been given for free to Royal Dutch Shell, Statoil, Exxon Mobil.

 

corrib.jpg

Ministers Ray Burke and Bertie Ahern changed Irish law in 1987 & 1992 so that multinational oil companies:
• own 100% of the oil and gas they find under Irish waters;
• pay no royalties on it;
• can write off 100% of their costs against tax, even costs incurred in other countries;
• have profits taxed at 25%, compared to an international average of 68% for oil-producing countries;
• can export the oil or gas outside Ireland;
• can sell to Bord Gais at full market rates.
Green Party minister Eamon Ryan has continued to issue licences to multinationals on these terms.

Now, call me old-fashioned, but I would have thought that the current situation would constitute a game-changer as regards that deal.

Anyway, have a read of the Shell to Sea leaflet, and have a think about it the next time someone tells you that the IMF is our only option.

This is just a short extract, the entire piece is linked below.

*The figures in detail

€420 billion is a lot of money. However, the true value of Ireland’s gas and oil is probably much higher. Our figure is based on the estimate, issued by the Department of Communications, Energy & Natural Resources (DCENR) in 2006, that the amount of gas and oil in the Rockall and Porcupine basins, off Ireland’s west coast, is 10 BBOE (billion barrels of oil equivalent). Based on the average price of a barrel of oil for 2009 of $60, this works out at $600 billion, or €420 billion. This does not take account of further oil and gas reserves off Ireland’s south coast. The total volume of oil and gas which rightfully belongs to Ireland could be significantly higher. The DCENR has also published much higher estimates at various times. Also, as the global price of oil and gas rises in the coming years, the value of these Irish natural resources will rise further.

++++++++++++++

A better deal is possible

Several countries have recently changed their laws to reclaim a greater share of gas and oil wealth

Even supporters of the Corrib Gas project rarely try to defend the outrageously generous terms of Ireland’s gas exploration laws in public. Instead they rely on the myth that the deal, once done, cannot now be changed. Nothing could be further from the truth.

The existing deal already allows Ireland to halt work on the Corrib Gas field. The licensing terms state: “The Minister may … require that specified exploration, exploitation, production or processing activities should cease … in any case where the Minister is satisfied that it is desirable to do so in order to reduce the risk of injury to the person … or damage to property or the environment.”

In fact, there is a worldwide trend of governments reclaiming ownership of privatised gas and oil reserves. In 2006 in Russia, the state-owned Gazprom took back control from Shell of the largest integrated oil and gas field in the world, Sakhalin-2, after Shell was accused of breaking environmental laws.

Bolivia nationalised its entire gas industry in 2006. At first, the reactions from the corporations and international markets in both cases were furious, with dire warnings given about how the countries would suffer from lost investment. But these warnings came to nothing: in the end the oil giants simply went along with these changes when they realised there were still enormous profits to be made.

There are many examples of successful nationalised oil and gas industries. Norway is one of the best examples of state-controlled extraction of gas and oil. Ironically, a significant chunk of the Corrib Gas profits will benefit the Norwegian people through Statoil, as it is majority-owned by the Norwegian government and has a 36% stake in Corrib.

Venezuela has begun nationalising the industry within the past two years. Most Venezuelans lived in degrading poverty throughout the 20th century, while enormous revenues from oil and gas went to foreign companies and a tiny Venezuelan elite. The government has redirected oil wealth into public spending, bringing health, education and dignity to the poor.

Even if Ireland’s gas and oil fields were not nationalised, hundreds of billions of euro could be raised if Ireland took a similar share in its own gas to that which applies in other countries.

Shell to Sea - All the Facts.

********************************************

18 Responses to “GAS VALUED AT €420 BILLION OFF THE WEST COAST OF IRELAND, WHILE FIANNA FÁIL SPEEDS US TOWARDS THE IMF”

  1. on 30 Oct 2010 at 11:58 amperry crisp

    So lets get nationalising, or is there more to this than meets the eye?? How deep does this go in relation to our corrupted politicians and exactly how many of them are involved.? This whole deal with Shell needs to be renegotiated for the best interests of the irish public.Can i suggest that this information be actively spread to all and sundry and then lets see what excuses the corrupted ones come out with.Well done for highlighting this travesty.

  2. on 30 Oct 2010 at 12:37 pmConor McCabe

    We don’t even have to nationalize, just get for ourselves the type of deal on royalties and tax which other countries cut for themselves. you tell bond dealers that Ireland’s got a steady stream of revenue from gas coming in for the next twenty years, and see what happens with regard the spread on the debt.

  3. on 30 Oct 2010 at 9:19 pmMick

    Well done for writing about this Conor. Too many people have steered clear of it in the past, and I still find it amazing that the country’s national resources going so cheaply isn’t causing uproar.

  4. on 31 Oct 2010 at 12:09 pmObsessiveMathsFreak

    This country doesn’t have the resources to nationalise something that big. At the end of the day, only a major Oil company has the resources and personnel to drill and distribute (and spill) that amount of gas.

    The country also needs to be very careful here as if we push too hard, Shell will simply run their pipelines into the UK and cut out Ireland entirely. If they run into jurisdictional difficulties they can just hire a) a private security company to run off the Irish Navy, or b) enlist the allied Navies if things get too heated.

  5. on 31 Oct 2010 at 12:20 pmDamian

    Conor,

    Within weeks of becoming minister, Eamon Ryan increased the taxes on oil and gas finds from 25 to 40% (link below.)

    I’d be keen to see the source for that 68% average tax rate claim. It may be contained in that PDF but I’m on a mobile device so don’t want to download a 46mb file!. I think comparisons to Venezuala, Bolivia and Russia are not very helpful, and Norway really is in a league of its own given the size of their energy resources and the number of years that they have been developing these industries. But if there’s a good case for further changes to our tax rates - and comparisons to other similar countries, I’d be interested in seeing them. What does the UK charge? Who else has oil and gas in the EU and what do they charge?

    http://www.dcenr.gov.ie/Natural/Petroleum+Affairs+Division/Latest+News/Government+announces+new+round+of+licensing+for+oil+and+gas+exploration+under+new+licensing+terms.htm

  6. on 31 Oct 2010 at 12:33 pmConor McCabe

    simply run their pipelines into the uk?

    Hire a private security company to run off the Irish navy?

    enlist the allied navies if things get too heated?

    Is this a fucking James Bond movie? Is this how your brain thinks?

    Jesus h. christ. One mention of Ireland charging royalties on gas and you end up with rejected film scripts as portents of reality.

  7. on 31 Oct 2010 at 12:49 pmConor McCabe

    Damien,

    ok, and did he close off the tax write-offs which make the tax rate an academic exercise? Did he introduce royality payments? Did he renegotiate the deal struck with relation to Corrib? Did he make the new tax rates apply to Corrib? did he impose a royalty payment with regard to Corrib?

    Typical Green party. no analysis, just press releases. what do you expect from a shower of pricks who fight for the rights of oil and gas companies, while supporting cuts in wages and social welfare.

    Damien, you are a fucking bastard press officer for a fucking bastard party. And as a party you are dead, so enjoy the privileges while you fucking can you fucking prick.

  8. on 31 Oct 2010 at 1:12 pmDamian

    Wow. Thanks for that, Conor. Great way to treat one of your readers.

  9. on 31 Oct 2010 at 1:43 pmMick

    About the time Ray Burke agreed this deal and according to the World Bank (1995) - The world average government take at the time was 64 percent.

    REF: http://rru.worldbank.org/documents/publicpolicyjournal/046khelil.pdf

    My understanding is also that this has increased slightly since then, so over to Damian to prove otherwise?

  10. on 31 Oct 2010 at 2:24 pmConor McCabe

    Damian, it’s not every day I get to tell the Green party’s press officer to go fuck himself, so when the opportunity arises, baby I’m taking it.

    you and your party are scum. right-wing scum. So, in the words of Paul Gogarty, fuck you.

  11. on 31 Oct 2010 at 3:05 pmConor McCabe

    By the way Damian, how do you sleep at night? How much money is the Green Party paying you that it makes the job of excusing the economic rape of this country a palatable dish for you? when you go home and turn on the heating that about a million people in this country have to think twice about for fear of bills, do you curl up in your cosy little duvet, switch off the light, and think “ahhhh, another day, job well done”.

    Really and truly, you and your party are scum. If you had any integrity left you’d resign as press officer and walk the earth in penance.

    but, of course, you don’t, so keep on sending out those press releases, keep on taking that pay cheque.

  12. on 31 Oct 2010 at 6:23 pmIan

    OBsessive MathsFreak, why did you deliberately ignore conor’s comment that “We don’t even have to nationalize, just get for ourselves the type of deal on royalties and tax which other countries cut for themselves.”?

  13. on 31 Oct 2010 at 8:26 pmElias

    http://www.vimeo.com/8668733
    1 hour documentary that shows some of the goings on. Another has been released recently but I don’t recall the name. Anyway you are right to be scared of shell, many of their opposition have ended up dead.

    We have some 16% of the working population employed by the government and 450,000 on social welfare, many of whom are engineers and scientists. I’m not sure how many are working in semi state bodies like the ESB. Many thousands back to third level to skill up. What kind of resources are you looking for? Plenty of Irish have worked on oil rigs and the like.

    There should at the very least be a force quantity surveyors for the Corrib, red tape, documentary evidence. I can’t see shell letting the people know what they are pumping out accurately. There’s no rush to sell the stuff as there’s always going to be a market. This government has no problem renegotiating - see the pension levy or wait to see what’s in the budget, but then maybe they are afraid of getting killed too.

    http://www.publications.parliament.uk/pa/cm201011/cmgeneral/deleg3/100720/100720s01.htm
    UK is 30% corporation tax + 20% on profits. 10% difference on the figures mentioned here is quite substantial. I am pretty sure our IDA tax deductible loans are in full swing for shell, among other sweeteners.

    Re: Venezuala, Bolivia and Russia comparisons not very helpful? Don’t dare compare us - perhaps because they have some backbone in addition to the corruption that is rife? The scots did not want a project in the style of the Corrib because they deemed it too dangerous, if you are going to allow that kind of danger, you had better be getting danger pay. And last but not least, let’s not forget the track record of International Petroleum corporations with respect to the environment.

  14. on 01 Nov 2010 at 2:37 amMark P

    Just a quick note to thank Conor for his comments above. That exchange with Green Party apparatchik genuinely made my day.

    I cannot begin to express how much I am looking forward to Green Party or Fianna Fail canvassers coming to the door.

  15. on 01 Nov 2010 at 7:29 amTim Johnston

    That was a bizarre reaction to Damien’s (above) quite reasonable comment. To answer his question, 68% is not the average tax rate, it’s the “government take” which includes royalties and the other ways government takes a share of natural resources. That average is also pulled upwards by the many countries with high takes, such as Bolivia - which sent in its army to take over production facilities, and are hardly worthy of imitating. Even comparison to near rivals might be counterproductive, as the aim is to undercut them not to match them.

    Ive read the Shell to Sea factsheet and wish they’d get their facts right. The gas is not “worth” 420bn Euro. It’s worth zip unless it’s found, extracted, processed and sold on the open market, which costs “a lot of money” to use S2S’ own words. Gas prices are also highly volatile so that figure changes on a daily basis.
    They can write off their costs against tax. Yes, all companies can do that, it’s not unusual. The reason they extracting companies won’t be paying any tax for a while, if Rapple is to be believed, is that they won’t be making any profits for a while. He seems to be suggesting that they’ll be making profits without paying tax, which is incorrect.
    There are no royalties because taxing profits is just less complicated that having royalties and taxes. Having said that, 25% is incredibly low, and the DCENR report has good suggestions regarding this.
    Having said all that, we should get maybe a government take of 35%. With that in mind Eamon Ryan made the right decision.

  16. on 01 Nov 2010 at 12:48 pmWilliam

    The Government’s “new exploration tax regime” — introduced by Eamon Ryan in 2007 and referred to by Damian above — represents no more than a minor tinkering with a relatively unimportant aspect of the licensing regime. The 40 per cent tax rate will only apply to the most profitable fields; many companies will continue to pay a paltry 25 per cent tax on profits. And in all cases, the companies can write off costs incurred outside the State before declaring these profits.
    Secondly, it is not retrospective, so Corrib and other fields already given away are not affected.
    Thirdly and most importantly, the State will still take no stake in the oil/gas itself; and companies will pay no royalties on gas or oil extracted.

  17. on 01 Nov 2010 at 7:27 pmTim Johnston

    William, I still don’t get how 25% is “paltry”. We might get 30-40% if we renegotiate, but how much do you think is enough and on what basis?

  18. on 01 Nov 2010 at 7:59 pmElias

    I think he meant incredibly low.