"This is one of the most important stories of it's kind in Europe."
OF ALL the big questions facing the State, few have more profound long-term implications than the management of our natural resources. Official estimates suggest a potential reserve of hydrocarbons equivalent to 10 billion barrels of oil off the west coast alone. Were all of this to be recovered, it would be enough to supply Ireland’s gas and oil needs for a century.
With the stakes so high, it is imperative that the State gets its approach right. It has to balance the need to get companies to spend vast sums drilling wells with the public interest in maximising benefits from resources that belong to the Irish people. There is some urgency. A new round of applications for exploration licences in Atlantic waters closed at the end of May. Fifteen applications were received – the largest number of any licensing round to date and an indication that Irish waters are an increasingly attractive prospect.
Once these licences are issued, the holders will be, in effect, entitled to develop any finds they make under the current terms. It is widely acknowledged that these terms are extremely generous to the energy companies and produce a very low return for the State. An Indecon report, commissioned by the State in 2007, noted that “the current fiscal regime . . . yields among the lowest government take in the world”. Since then, the regime has changed slightly, with the potential for a higher tax take on very profitable fields.
By international standards, however, the terms remain very generous. Minister for Communications, Energy and Natural Resources Pat Rabbitte argues, in line with his Fianna Fáil and Green Party predecessors, that such terms are necessary to stimulate exploration activity. He may well be right, but the issue is too important to be left solely to the judgement of an individual minister.
The economics of energy and the technologies for recovering oil and gas from deep waters have changed so radically that it is time for a proper public review of this whole issue. That review should be undertaken by the Oireachtas committee on communications, natural resources and agriculture. It should be both open and open-minded, seeking not least to give the public some clarity on key questions. What is the status of the many discoveries made in recent decades that are still “under assessment”? How well do the current terms guarantee security of supply? Do they ensure the maximum amount of employment for Irish workers?
Mr Rabbitte’s position in this regard seems oddly contradictory. In April, when Éamon Ó Cuív suggested such a review in the Dáil, Mr Rabbitte replied that “I will agree. I will accept the spirit of his proposition.” Subsequently, however, he said he would go ahead and issue the licences under the current round, regardless of what the Oireachtas committee decides to do. This is an absurd approach to such a serious question: decision first, debate afterwards. It is not the way a healthy democracy considers issues of vital public importance. There should be a pause in the issuing of licences until the end of the year, to allow the Oireachtas committee to conduct a rigorous review.