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Rabbitte defends oil exploration deal terms

Lorna Siggins- Irish Times

 MINISTER FOR Energy Pat Rabbitte has rebutted criticism of his decision to award 13 new licensing options in Ireland’s Atlantic offshore area.

Fianna Fáil energy spokesman Éamon Ó Cuív said he is “disappointed” that Mr Rabbitte should have awarded the options before an Oireachtas committee had completed its review of existing State terms for oil and gas exploitation.

A former board member of the Norwegian oil and gas company Statoil, Stein Bredal, has also questioned Mr Rabbitte’s “haste”.

However, the Minister’s move has been welcomed by Providence Resources, one of the 12 companies benefiting from the 13 awards announced at the Atlantic 2011 petroleum conference in Dublin yesterday.

Mr Rabbitte told The Irish Times that he wanted to generate international interest in Ireland’s “challenging” offshore area, and said the new options were awarded under terms reviewed in 2007 by former minister for energy Éamon Ryan.

Mr Ryan’s changes were based on a 2006 departmental study which estimated 10 billion barrels of oil/gas equivalent in Irish waters, worth €800 billion at prices of €80 a barrel.

Shortly after being appointed Green Party energy minister, he introduced a return of up to 40 per cent on very large finds registered after 2007 only.

The current return on commercial fields is based on 25 per cent corporation tax, with its development expenses offset against tax, reducing the overall take by the State.

The new licensing round will allow companies the first refusal on exploration licences over 250,000sq km of the Atlantic shelf, which is an area about three times the size of the island of Ireland.

Five companies already active in Irish waters and seven new entrants have been offered acreage on the Porcupine, Slyne and Rockall basins under a two-year licence agreement.

The five existing companies are the O’Reilly family-run Providence Resources Plc; Chrysaor; Serica Energy; Sosina Exploration; and San Leon Energy.

The seven new successful entrants are Antrim Energy; Bluestack Energy; Europa Oil Gas; First Oil Expro; Petrel Resources; Repsol Exploration; and Two Seas Oil Gas Ltd.

“We have had only one meeting of the Oireachtas committee reviewing the State terms, and I am very disappointed that Mr Rabbitte has pre-empted its findings,” Mr Ó Cuív said.

Mr Rabbitte said: “Ireland must continue to communicate the message to international exploration companies that Ireland is open for business and that the Irish offshore has real potential.” He also pointed to the cost of up to €100 million to drill wells, which ruled out proposals for greater State involvement.

However, Stein Bredal, a former board member of the Norwegian oil and gas company Statoil, said Mr Rabbitte was clearly unaware of technological developments that made deep water drilling much more attractive.

“Energy prices are only going up, so why is your Minister in such a hurry, when he should be guaranteeing jobs and a greater return to the Irish taxpayer if there is a find?” Mr Bredal asked. “Norway had four brave politicians who brokered a deal with the multinationals and ensured Norway would develop expertise through setting up Statoil.”

The two-year licence options may be converted into frontier exploration licences which have a 12-year term, and Providence Resources Plc welcomed procurement of licensing options in four areas covering an estimated 5,000sq km and which range in water depth from about 400m to 3,000m.

Siptu oil and gas offshore committee spokesman Padhraig Campbell said Mr Rabbitte’s petroleum affairs division was taking a “sycophantic, minimalist approach” to a resource.


Posted Date: 
18 October 2011