Fields of black gold?
News that the oil field off Barryroe could yield 1.6 billion barrels of oil has been welcomed by most of us – we’ll take good news wherever we can get it.
The local economy needs whatever it can get at the moment, and if it means jobs for construction workers, engineers, and ancillary staff even in the short-term, that’s a good thing.
However, there’s a distinct possibility that it won’t.
The history of oil and gas exploration in this country makes for grim study. It’s been beset by lobbying, snap decisions and power grabbing by ministers that has almost never been in the interests of those they were supposed to represent.
In 1987 Fianna Fáil’s Minister for Energy Ray Burke introduced licensing terms that removed State royalties and State participation from oil and gas licencing terms, and introduced 100 per cent tax write-offs for exploration and development costs dating back 25 years. In 1992, Minister for Finance Bertie Ahern reduced corporation tax on oil profits from 50 per cent to 25 per cent.
In 2007, during his brief time as Minister, Eamon Ryan of the Green Party did attempt to undo some of this damage, and introduced new terms that increased the top rate on profitable fields to 40 per cent.
Tax on profits is one thing, however, and tangible economic benefits are another.
The licence that Providence operates under contains no insistence that any Irish jobs are created. As with the Shell project off the coast of Mayo, it’s entirely possible that workers from abroad with expertise in this area will be brought in.
It’s also entirely possible that the oil found off Barryroe will never touch Irish soil – there is no provision that says it has to be refined or processed here, or even pass through Ireland before being sold to the highest bidder on the international markets.
Ireland has no right to ‘first dibs’ on the oil found by Providence. It’s owned by Providence shareholders, not by you and I. (Unless you are a Providence shareholder, in which case I commend your wise investment - but you'll still be paying top dollar for your petrol). So the price of our oil and petrol will not drop due to this find. We will still be buying it on the international market along with everyone else.
Last year, as it was hardly in the door, the new Government defeated a Sinn Féin motion for introduction of a 50 per cent tax on profits from any oil and gas find, and a return to 51 per cent State participation and 7.5 per cent royalties. Worse, it hasn’t come up with any alternative, and seems to be quite happy with the status quo where our natural resources are concerned.
Minister Pat Rabbitte, by that stage, had agreed to let an Oireachtas committee review the oil and gas licencing terms. However, after it had met just once, he granted 13 new licences… under the old terms.
Yes, Providence is an Irish company, owned by Tony O’Reilly and with a Ballinlough man at the head of its technical section. But we know from bitter past experience that private companies focus on their shareholders, not on the public purse.
This is great news for Providence, and its shareholders. For the rest of us, however, it represents yet another missed opportunity.