Minister dictates what consultants’ findings should be: that things are fine the way they are
Last week Minister for Energy and Natural Resources Pat Rabbitte named the company chosen to carry out a “fitness-for-purpose” review of Ireland’s infamous licensing terms for oil and gas exploration. Unfortunately, the company he has tasked with carrying out this review is Wood Mackenzie, a company at the heart of the very industry that stands to gain from Ireland’s “attractive” licensing regime remaining as it is. Wood Mackenzie is an oil industry consultancy firm: what Mr Rabbitte is asking it to do is recommend whether or not he should reduce the share of revenue that some of its clients will receive from the sale of Irish oil and gas.
Wood Mackenzie’s parent company Hellman & Friedman also jointly owns an LNG (Liquefied Natural Gas) engineering company with oil major Total (see note below).
Interestingly, one piece of consultancy work carried out by Woodmac (as it is familiarly known in the industry) was a private study for Shell E&P Ireland in 2003 into Shell’s Corrib Gas project. That study projected that Shell and its partners could expect to pay just €340 million in tax to the Irish exchequer on their earnings from Corrib. That extraordinary revelation is dealt with in this article I wrote in 2011:
Ireland’s share of revenue from Irish gas fields could be as low as 7%, report shows
In fairness to Mr Rabbitte, he probably didn’t choose Woodmac himself. The choice will have been made by his officials in the Petroleum Affairs Division of the Dept of Energy and Natural Resources, who have consistently been sympathetic to the oil industry.
14 March 2014