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Ireland 'should seek loans' from Norway's oil fund

Lorna Siggins, The Irish Times

Tuesday, November 9, 2010


A GROUP campaigning to change State oil and gas licensing terms has suggested that the Government should borrow low-interest loans from Norway’s oil fund, using Ireland’s offshore territory as “collateral”.

The Campaign for Protection of Resources (CPR), which Minister for Energy Eamon Ryan helped found while in opposition, has also urged Mr Ryan to halt what it describes as the “final giveaway” of 250,000 sq km on the Atlantic margin.

Minister of State Conor Lenihan recently travelled to Singapore to advertise the 2011 Atlantic licensing round, which he initiated earlier this year and which is the largest such round to date.

Campaign chairman Padhraig Campbell said the new licensing round under terms initiated by Mr Ryan in 2007 was still “weighted too heavily in favour of the oil industry, with no royalties, no automatic share for the State and a tax rate that oil companies can manipulate”.

He has proposed that the Atlantic blocks be used as a guarantee to Norway in negotiating a low-interest loan for Ireland from the multibillion-euro Norwegian oil fund. “This fund has been built up from contributions paid in by oil companies operating in the Norwegian sector, where the tax rate is 78 per cent,” he said yesterday.

Low-interest loan bonds from Norway would “significantly reduce our reliance” on bondholders in the market.

He pointed out that a Government-sponsored consultancy study by Indecon published in 2007 had estimated Irish oil and gas resources at a value of €430 billion for the next 90 years.

“The CPR proposes a joint 50-50 ownership deal with Norway that would replace Mr Lenihan’s giveaway proposals,” he said.

An oil and gas directorate similar to the Norwegian model could also be established by the State, he said.

Mr Campbell criticised comments last week by Fine Gael’s energy spokesman Leo Varadkar, when he addressed the Energy Institute, in relation to maintenance of current oil and gas terms and the need to bring gas from the Corrib field off Mayo ashore.

The Department of Energy described as “simplistic” the “conclusion that Ireland’s oil and gas tax rates are too low”.

“Comparing Ireland with Norway is simply not comparing like with like,” the department said last night. “Each country sets its tax terms on the basis of the conditions that prevail in that country.”