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Sharing energy with Norway

Colm Rapple - Letter to the Irish Times

Sir, – Minister for Energy and Natural Resources Pat Rabbitte’s response to Fintan O’Toole’s article (August 16th) on our offshore licensing terms and his intention to issue new licences under the current licensing terms is disingenuous in the extreme (Opinion, August 18th).

His comment that the 15 licence applications currently being considered cover only 6 per cent of the area on offer is meaningless. The area has been well surveyed and the structures likely to contain oil and gas identified. They account for only a small fraction of the total area.

The Minister’s comment might be meaningful if he indicated what proportion of that much smaller area has been applied for.

His suggestion that a debate on the relative merits of tax, royalties and State shareholding is irrelevant in the absence of a commercial find, ignores the fact that once a licence, or in this case an option to apply for a licence, has been granted the State is committed to apply the current terms that don’t allow for royalties or State equity stakes. All three may be, as the Minister says, simply instruments to ensure a return to the State, but there are major differences between them which he should be willing to consider as part of a major review of the licensing terms.

It could be many years before any tax flows from an offshore find since all exploration and development costs can be written off up front before taxable profits are declared. Royalties are charged on production and would benefit the Exchequer as soon as the oil or gas started to flow.

Dividends might not flow to a shareholding for some years, but it would acquire a significant value immediately a find was declared commercial.

Mr Rabbitte has expressed his willingness to engage in a review of the current terms, but has refused to postpone the issuing of fresh licences until that review is completed. It’s time he did so.

While waiting, the oil companies that already have licences could be encouraged to speed up their appraisal of the 13 existing oil and gas finds that are still under assessment. – Yours, etc,


Millview Lawns,

Malahide, Co Dublin.

Posted Date: 
23 August 2011