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Why minister should read the book on owning our oil

By: 
Eddie Hobbs - Sunday Independent

Unfairly alienating the Irish people from their natural resources is an attack on sovereignty

On the first Monday of March, Own Our Oil, the book and national briefing campaign, was launched. RTE Radio's Morning Ireland was to take it at 7.30am, a chance to set the national news agenda. Alas, a message was left Sunday night – the item had been cancelled. The recording explained that my recent interview on the Saturday Night Show in January was the reason. So I checked my diary – the interview had been in January 2013, nearly 14 months earlier. Two days later, the Today with Sean O'Rourke cancelled its scheduled Wednesday morning interview, maintaining RTE radio news silence.

But RTE Prime Time, Tuesday night, caught the significance and staged a TV debate. Minister Pat Rabbitte, who is the regulator, arrived, it appeared, with a closed mind, and was forced to admit he hadn't read the book, and relied on pre-rehearsed one-liners. At one point, the regulator attempted to dismiss the work of the 17 writers with the extraordinary fiction that it was cover for a Dalkey pressure group concerned about a rig in Dublin bay.

Minister Rabbitte believes that there is no ground between the Irish State's craven low-tax policy and sinking taxpayers' money into drilling wells – he should read the book. Ireland has plenty of options, including PPPs, grounded in licences that compel the passing of expertise to a new operational national exploration company.

The Irish people have the hydrocarbon resources, private industry has the capital and the world bristles with how these can come together – the real problem is the State's callow, servile and unambitious mindset. Viewers were left wondering about Stockholm Syndrome, watching the regulator nodding sagely with industry inputs, raising the question of just how deep his department's groupthink has become captive to those they regulate.

Minister Rabbitte looked agog at the sinkhole opening up under his tax giveaway policy from a recent collation of data pulled from the regulator's website which showed 98 holes drilled during Ireland's tighter regime beforeRay Burke dismantled it, versus 69 ever since, that's seven per year from 1975 to 1987 versus an average of two today.

He announced that if explorers hit oil and gas, the Government will retrospectively introduce new taxation, demonstrating an incomplete grasp of the rights to property that his officials are giving away. Production sharing cannot be backdated without fouling on Constitutional nets. The regulator should read the book. By suggesting the rules of the game can be changed on-the-hoof, as he did on Prime Time, the minister adds to reasons why private risk capital is difficult to attract into Irish territory – instability, lack of strategy and, as Corrib demonstrated, an insane planning system.

Own Our Oil contains three options on how to de-risk planning, including a one-stop shop overseen by a High Court judge affording both citizen groups and industry a transparent and expert process, unencumbered by ministerial interference. But then Minister Rabbitte hasn't read the book.

By some stretch, the most common initial reaction from the public to the debate so far has been the surrender of ownership and control. The sweet spots in our massive offshore territory are pockmarked with options and licences that transfer ownership and control to private shareholders and while the licence applicants may appear locally managed, revenues are quickly farmed out to players like Woodside, Australia's largest oil and gas explorer to whom Petrel Resources, registered in Clontarf, has already farmed out 85 per cent of 1,400 sq km in the Porcupine Basin in a deal done this month.

"We have long known Ireland's Offshore Porcupine Basin is a hydrocarbon province. Our recent work identified a number of high-potential prospects, at least one we believe has a billion barrel potential." So said Petrel Resources CEO David Horgan recently, meanwhile his business partner John Teeling, Petrel's chairman, described calls for a revision of Irish strategy, like listening to a voice from Pixieland.

Teeling is right because the former owners of the hydrocarbon potential are giving it away in the hope that the State might get some far-off tax revenues – in the meantime we buy back our own oil and gas at international prices from its new owners.

Corrib – where there is gas – is owned and controlled by a consortium comprising Shell, Statoil and Canadian company Viridian and has been the subject of much controversy from an environmental and safety perspective. If we're honest, many of us were rather hoping that we'd make a few bob when the gas finally comes on stream next year. If you were one, you can safely file that thought away next to burning the bondholders – under popular fiction.

In 2008, responding to a parliamentary question, then Environment MinisterEamon Ryan reflected civil servants' estimates that with 800-900m cubic metres of Corrib gas valued at €9bn, the Revenue might pull in 18 per cent or about €1.7bn in corporation taxes. We'll make more from pulling in crabs if insider estimates of what Ireland stands to get from Corrib are correct. These estimates range from nothing to, maybe, low single digits and the calculations sour when you consider that, globally, national takes range from 60 per cent to 80 per cent, with Ireland out on the extreme of low pricing.

Take Uganda, a frontier location like Ireland – it applies royalties to sales and its model is based on production sharing not production surrendering. Uganda's enlightened policy formulation was funded by some generous European taxpayers, no marks for guessing whom – the pixies.

Can existing licences be challenged? You'll be unsurprised to learn that the State unilaterally declared itself the owner of our natural resources in the 1937 Constitution, contrary to the public trust doctrine enunciated in the 1922 version. The State has made its position non-justiciable, a clear attempt to eliminate any challenge through the courts. The Ugandan constitution does the opposite.

Within days of the launch of Own Our Oil, Minister Pat Rabbitte announced the consultants appointed to undertake a review of Irish pricing policy to test its fitness for purpose. Scottish firm, Wood Mackenzie, founded in 1973 to appraise North Sea fields, got the gig. The minister was responding nearly two years after a Joint Oireachtas Committee completed a report that suggested grandfathering the existing regime for fear of 'reputational damage' but re-pricing new licences.

Will Wood Mackenzie, who consulted for the Corrib Shell consortium, challenge the Irish State at a fundamental level and include wider issues relating to planning, strategic positioning, Norwegian-style principles, the setting up of a national exploration company or, heaven forbid, drilling in the precious waters surrounding the Irish Constitution?

Will 'Woodmac' conclude that unfairly alienating the Irish people from their natural resources is an attack on their sovereignty, a breach of human rights or in conflict with international agreements signed by Ireland?

That's the kind of thing the closed-minded minister and his department clearly wouldn't want to hear, especially when it comes from some of the pixies themselves in informed public debate.

Better to spend their cash on reports, dismiss the issue as one for experts only and recycle the poor mouth – that there is no other way except to surrender.

Posted Date: 
16 March 2014