# Oil find off coast of Cork



## dewdrop (15 Mar 2012)

I wonder how long it will be before the first objector surfaces?


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## Latrade (15 Mar 2012)

dewdrop said:


> I wonder how long it will be before the first objector surfaces?


 
Probably the same cynical people who unreasonably objected to the fact that the last government sold off our entire claim to the oil and so we'll never see a cent of it.


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## Pique318 (15 Mar 2012)

There'll be a stream of coaches from Dame Street to Cork now.


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## Purple (15 Mar 2012)

Latrade said:


> Probably the same cynical people who unreasonably objected to the fact that the last government sold off our entire claim to the oil and so we'll never see a cent of it.


Can anyone post the details of what the actual situation is?
I do know that the cost of exploration is massive, especially in deep water, so it's unreasonable to expect the Irish state to offer anything other than attractive terms to companies taking the risk of drilling there.


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## Pique318 (15 Mar 2012)

someone posted this in the comments section of the story on Breaking News.ie


> Based on Pat Rabbit's previous statements on the issue - "how much Ireland gets in return for oil finds"
> The  government have set a 25% tax on all profits from commercial oil finds  (note profits only come into affect after the underlying costs have been  paid off)
> Depending on the size of the find / profits, the Tax Take can rise to 40-50%
> 
> Unlike  Norway who subsidise Oil companies to drill in the northsea - and have a  1 in 4 strike rate (ireland currently has a 1 in 40 strike rate) Norway  get 50-70% tax on all profits from commercial finds.



Read more: http://www.breakingnews.ie/business...y-flows-oil-and-gas-543595.html#ixzz1pCFpzh9t

So a 25-50% 'corporation tax' rate on Oil finds seems pretty high in relation to the 10% -12.5% that most other businesses pay (and probably 0% with the incentives for some of the big players who pimp themselves out for a European base), so I reckon it's not too bad.

However, we should demand that 50% of the oil is dedicated to Ireland rather than have to sell it ot someone else and then import our oil from Saudi/Libya etc..

Of course, that will NEVER happen.
​


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## Latrade (15 Mar 2012)

Purple said:


> Can anyone post the details of what the actual situation is?
> I do know that the cost of exploration is massive, especially in deep water, so it's unreasonable to expect the Irish state to offer anything other than attractive terms to companies taking the risk of drilling there.


 
There's an indecon report that covers the general information. Link

The deal is that we don't have the resources, industry or expertise to do this ourselves and so need (as do most other countries) to make ourselves "attractive" to the oil companies to invest in. Another problem is most oil reserves are deep ones and the technology to exploit this and make money is relatively recent. 

So the idea was that we would essentially offer very attractive rates and tax breaks to get companies to invest in exploration. 

Ray Burke cut the State’s share in  offshore oil and gas from 50% to zero and abolishing royalties. We get nothing. 

Bertie  reduced the tax rate for the profits made from the sale of these resources from 50% to 25%. But then also introduced breaks into the tax system so that there is a 100% write off of investment before they would pay any tax. This includes the cost of exploration, drilling, etc, but also allows companies to put upfront the cost of closing the rigs too all before they declare a profit. 

In essence it's a bit like the Hollywood film contracts that allow the film companies to have some grey accounting so that a film is never officially in profit. Thus they never have to pay any royalties to the writers, crew, director or actors. The Harry Potter franchise has made billions, but has never officially made a profit.

There is too much potential to write off as a cost without close scutiny so that not even a cent of tax is paid.

There's unlikely to be any immediate or even short term jobs benefit as the skills and knowledge don't exist here yet. 

There's some a benefit to having some oil and refined and processed here so that we aren't at the end of the european pipe. Does that equate to a more standard contract for exploration? Probably not.


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## gillarosa (15 Mar 2012)

The Troika will insist that it be nationalised and the proceeds used to pay the gambling debts accrued during the (previous) boom


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## Shawady (15 Mar 2012)

We're rich I tells ye, rich!


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## Slash (15 Mar 2012)

I wouldn't get too excited about this "find". This is, after all, Providence Resources.

Believe it when you see it.


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## micmclo (15 Mar 2012)

West Cork you say?

Kerry will be fighting for this too!


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## Purple (15 Mar 2012)

micmclo said:


> West Cork you say?



Wll be the thing that finally pushes Cork to become the People's Republic in fact as well as name?
If so it will have been worth it


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## micmclo (15 Mar 2012)

No, the oil belongs to Munster

Our greatest Irishman Brian Boru once ruled from Cashel

The bank debts were caused by the Dubs, let Leinster deal with that
We'll spend our oil money and turn Cork Harbour into Dubai


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## SoylentGreen (15 Mar 2012)

Slash said:


> I wouldn't get too excited about this "find". This is, after all, Providence Resources.
> 
> Believe it when you see it.


 
Yes I remember Atlantic Resources only too well!


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## roker (15 Mar 2012)

It will takes years to design and build production platforms and drill more production and injection wells


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## Purple (16 Mar 2012)

roker said:


> It will takes years to design and build production platforms and drill more production and injection wells




There's a big increase in the supply of production platforms in recent years. Suppliers are building them on spec rather than to order because of the huge increase in demand. That said I agree with your point; there's a spend of a few hundred million before any oil gets to shore.


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## Latrade (16 Mar 2012)

Purple said:


> There's a big increase in the supply of production platforms in recent years. Suppliers are building them on spec rather than to order because of the huge increase in demand. That said I agree with your point; there's a spend of a few hundred million before any oil gets to shore.


 
This is the gamble they took. That by having 0% royalties and tax breaks to write off the whole development (without too much specifics allowing for some grey accounting), that if a rich reserve is found, we will be attractive to the companies and we will then profit from their local bases and living in local areas, buying houses, spending money, etc rather than from the oil. Eventually, in the longer term we may even have local skills that can be employed in oil. 

It's either a genius or an extremely stupid gamble.


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## Sunny (16 Mar 2012)

To be fair to the Government, it is an extremely difficult situation. We are not Norway. We are the wild west of oil exploration. Striking the balance between encouraging companies to drill wells in a Country with no large proven success stories while ensuring the State benefits to a large extent from any find is a tough balancing act. Even the report linked to above says:

_'We believe, however, there may be potential to capture a higher share for the Government on more profitable finds but the potential for this should not be overestimated.'_​


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## micmclo (16 Mar 2012)

Celtic Tiger nua is here 

We will spend our new found riches on horse racing and hotels
If there is one thing Ireland needs its more hotels

And our politicians will live like princes.
A new mercedes for every minister


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## Chris (16 Mar 2012)

Pique318 said:


> However, we should demand that 50% of the oil is dedicated to Ireland rather than have to sell it ot someone else and then import our oil from Saudi/Libya etc..



While it may not make sense looking at it in simple terms like export some oil and then import from somewhere else, this may make perfect economic sense. The only oil refinery in Ireland (Whitegate, Co. Cork) is set up to process light sweet crude oil, the kind found predominantly in the middle east. I could be mistake, but I believe that all oil from the North Sea is a heavier type which requires a different type of refinery. While I have no idea what type of oil was found off the Cork coast it may not be usable in the refinery in Whitegate.

Also, talking to my local petrol station owner a few weeks ago, who sources some of his fuel from Whitegate, he said that the refinery could shut down within a few years as it is simply cheaper to import it from the UK and the continent. In that case Ireland would have very little use for crude oil.


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## One (20 Mar 2012)

The amount of misinformation about this is extraordinary. The way the media (especially the ones that are supposed to be reputable) cannot present the facts accurately is incredible. The government has done a lot of things wrong, but the way it handles our natural resources is not one of them. They do this exactly right. What makes a debate like this hard is people produce information that quickly becomes too boring to read or listen to, and quite often poorly researched unfounded information is presented as Gospel fact. There is a difference between facts and opinions. 

Here are some facts that you can relate to and will easily make sense:
1. Over the last 40 years four offshore gas fields have produced gas and one has produced oil. 
2. Protestors say that the government has given away €580BN of Irish resources. I would love for them to point to exactly where those resources are, who owns them, and what wells all these resources are been taken from! The reality is that the figure of €580BN has been proposed by some loony toon of an economist and then circulated as a truthful respectful value. 
3. The Corrib gas field was found in 1996 and won’t produce any gas until 2014 at the earliest, and it will be years after that before it produces any profit. The time from when it was dicovered until when it starts to make any profit is 20 years; this time frame is unheard of anywhere else in the world. Almost €3BN has been invested in the Corrib gas field to date.
4. The Irish taxpayer will get between €3-6BN from the Corrib gas field, despite protestors saying Ireland will get nothing.
5. Today the gas industry in Ireland consists of Kinsale and its three neighbouring fields, and the Corrib Gas Field which is not producing anything yet. There is one oil producing field in Ireland. This is after only 40 years of exploration!
6. The government can increase the tax on natural resources tonight if they wanted to.
7. This nonsense of Ray Burke giving away something is rubbish. Any decision made by Ray Burke can be overturned. Don't think for one minute it can't! For God’s sake The Irish Constitution itself can and does get amended. There have been numerous new governments in place since Ray Burke’s time. The government has changed from Fianna Fail to Fianna Gael. The current minister is a member of the Labour Party. They can all change any decision that Ray Burke made but have chosen not to do so.
8. Ray Burke’s decision has no effect, none whatsoever, on the terms and conditions being offered today. 
9. I sat beside a Fianna Gael T.D. the day of my uncle’s funeral and listened to him talking about how the licences for exploration were given away in the 1970’s. How people like him are voted in I will never know! Pure rubbish! He is one of four T.D.s that I have heard talk wildly inaccurately about Ireland's natural resources and the terms and conditions offered. 
10. In 2006, the Government retained the services of international economic consultants Indecon to carry out a review of Irish licensing terms. Indecon’s review proposed that a Resource Rent Tax be added to the existing 25% corporation tax rate. Indecon did not recommend the reintroduction of royalties or percentage state ownership. 
11. In August 2007, the Department of Communications, Energy and Natural Resources introduced new licensing terms which operate on a graded basis. On the most profitable fields, the taxpayer will get 40%. Click on the link and scroll down to Eamon Ryan’s name.
http://www.lowtax.net/lowtax/html/jirdctx.html#corporation
12. No company who got an exploration licence from Ray Burke is still exploring today! Please look at the dates on the licences below. Ray Burke’s infamous decision was in 1987.
http://www.dcenr.gov.ie/NR/rdonlyres/A05FD73F-A976-49F7-8674-A8544003FFC1/0/AcreagePositionReportSeptember2011.pdf
13. Compared with the U.K. and Norway oil and gas companies don’t invest much in exploration in Ireland. The U.K. get four times more interest. Please see the link to companies exploring off the Irish Coast;
http://www.businessandleadership.com/economy/item/32839-rabbitte-grants-13-offshore
and off the U.K. coast in The North sea.
http://www.bbc.co.uk/news/business-16362266
The successful exploration in the UK and Norwegian offshore areas has resulted in exploration companies being prepared to invest heavily in exploration in those countries, despite the fact that the State’s tax take is much higher than in Ireland. For example, more than 1,200 exploration and appraisal wells have been drilled to date in Norway and more than 4,000 in the UK. That compares with a total of 156 wells for Ireland.
14. The Irish Government have kept corporation tax low in Ireland, and it attracts foreign companies into Ireland. This is extremely important to Ireland right now. This low rate attracts foreign investment very well. We often hear the French and German governments complaining about Ireland’s low corporate tax values. What the government does do for the gas and oil industry is along the same lines. They give low tax incentives, and they get 25% of all profits, but as soon as oil or gas is found, the government get criticised for giving natural resources away too cheaply. The government can’t win on this. Our generation has been let down by the government, making it easy and simple to believe that they can’t do anything correctly.

In my opinion, Pat Rabbitte is getting the balance exactly right, but I sure do feel sorry for him when he tries to convince an untrusting Irish public just that! Here is a summary;
· There may be and there may be no large oil or gas fields offshore.
· Like most other countries around the world we can’t afford to look.
· It is hard to get oil and gas industries to invest in Ireland because the chances of them finding fields that are commercially viable are relatively low.
· The government gives as many incentives as they can to invest.
· The government get blamed for giving too much away when something does get found.
· The oil and gas industries do declare profit. They get taxed on that profit. The taxpayer does benefit.

Bored yet? I don’t blame you!


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## One (20 Mar 2012)

Latrade said:


> There's an indecon report that covers the general information. Link
> 
> Ray Burke cut the State’s share in offshore oil and gas from 50% to zero and abolishing royalties. We get nothing.


 
Incorrect. We do get something.

Yes, Ray Burke cut the State's share in offshore oil and gas from 50% to zero.
Yes, Ray Burke abolished royalties (as many other European countries did at the time).

But, what happened was the way we get profit from the natural resources changed. Instead of owning the resources that are found, or holding royalties, we get profit by corporation tax. Normal corporation tax in Ireland is about 12.5%. Corporation tax on the most unprofitable fields is 25%, the increase in tax reflects that our natural resources are being taken. Corporation tax on the most profitable fields is 40%. 

People say that we don't own any of our natural resources that are producing gas or oil. They are 100% correct. But it is misleading. Because many people misunderstand that as meaning we don't get anything for our gas or oil. But we do. And the bigger the find the more we get.


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## One (20 Mar 2012)

Latrade said:


> There's an indecon report that covers the general information. Link
> 
> 
> 
> Bertie reduced the tax rate for the profits made from the sale of these resources from 50% to 25%. But then also introduced breaks into the tax system so that there is a 100% write off of investment before they would pay any tax. This includes the cost of exploration, drilling, etc, but also allows companies to put upfront the cost of closing the rigs too all before they declare a profit.


 
This is 100% correct. And at the end of the day the companies make vast profits. And the taxpayer gets 25% of those profits.


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## One (20 Mar 2012)

Latrade said:


> There's an indecon report that covers the general information. Link
> 
> 
> There is too much potential to write off as a cost without close scutiny so that not even a cent of tax is paid.


 
Sorry, but I don't know how you can credibly justify that remark.


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## One (20 Mar 2012)

Latrade said:


> There's an indecon report that covers the general information. Link
> 
> 
> 
> There's unlikely to be any immediate or even short term jobs benefit as the skills and knowledge don't exist here yet.


 
Fact = Terminal 2 at Dublin airport was Ireland's biggest construction site in 2009. The Corrib gas terminal was Ireland's second biggest construction site in 2009. There are 600 employed there today, 50% of them are local people. I live in County Mayo. I know exactly what goes on. Sometimes many people from other countries are emlpoyed because of their expertise at starting up a plant, but a lot of locals get jobs too, and they are good jobs.


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## One (20 Mar 2012)

Latrade said:


> There's some a benefit to having some oil and refined and processed here so that we aren't at the end of the european pipe. Does that equate to a more standard contract for exploration? Probably not.


 
But it is very difficult to propose such a contract that will get the foreign companies to explore here. That is the fundamental problem here and always has been. We can't do the drilling ourselves. Companies are hesitant to do so. That is the key issue that protestors and some of even the most trusted media personalties never mention. We have the exact same approach to natural resources now, as Norway had before large fields were found in Norway. When large fields were found in Norway, the Norwegian government changed their policy immediately. If large fields are found here, the same will happen, and our government will increase our profits too. Until then we are begging companies to come here and explore, but they tend to want to explore in places such as the North Sea which has an amazing history of success. That is the crux of the problem. Critics of the government will go on TV and propose all sorts of ideas. The media should interview the heads of companies who don't drill in Ireland, and that is where you will hear a better version of the truth.

13 exploration licences were awarded in Ireland in 2011. But that doesn't mean that 13 companies will drill wells. They will send boats out onto the sea, and using sonar radar they will check the geology of the underlying seabed. They will review that data and either decide to drill at a cost of over €1M a day, or they will simply hand the licence back and do nothing.

I know I have dissected your post, and tried to make comments about what I think is correct and what isn't. I am certainly not trying to be insulting, and apologise if I am. I am just saying that what gets published in Ireland's leading newspapers, and on RTE televised debates is very misleading. I have actually wrote a letter to a T.D. constructively complaining to him about his opinion on Ireland's natural resources. I told him he was damaging his credibility in Dail Eireann, and among his fellow politicians. He said thanks and duly ignored me. And why not? I have written alot but maybe it is me who has got things wrong! C'est la vie.


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## Purple (20 Mar 2012)

Good post One, very well put.


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## smiley (20 Mar 2012)

yes i agree.


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## Latrade (21 Mar 2012)

One said:


> I know I have dissected your post, and tried to make comments about what I think is correct and what isn't. I am certainly not trying to be insulting, and apologise if I am. QUOTE]
> 
> No, I don't think you were insulting at all and it's good to talk over the points. However, I may be wrong, but the only areas where we disagreed was:
> 
> ...


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## One (21 Mar 2012)

Latrade said:


> One said:
> 
> 
> > 1. 25% tax on profits and my point that they can write off the entire start up and shut down costs off the taxable profits. I presume we don't disagree that they can, as this is part of the deal. I'm also not arguing that this isn't a "cost" either. But, my understanding is that the deal isn't specific enough as to the type and nature of costs that can be used to avoid tax. In my opinion it leaves too much room for some grey accounting that will always be offset as set up costs. This could be training, IT training, relocation costs for staff, and so on. The example of the film industry is just one to show that people can be creative with accounting to demonstrate they never make a profit and pay a tax.
> ...


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## One (21 Mar 2012)

Latrade said:


> One said:
> 
> 
> > 2. The skills. I was largely talking short to medium term. You're right that Terminal 2 used Irish labour, but this is different. Vastly different. We have the engineers for civil engineering, we have the trades. We don't have the Petrochemical engineers or the fitters, electricians, divers, welders, operators. We have limited resources for helicopters of sufficient size to get people to and from a rig. We don't have the paramedic/emergency response expertise needed to work on a rig. It's hugely specialised and it will take a long time before we have a strong Irish workforce who can service the industry. Not just direct labour, but also suppliers and contractors to the industry. There are only a few contractors who could provide sufficient labour. It will take longer than just the plant being finished before we will be able to rely on local labour. In a lot of cases we may never be able to rely on local labour because it will take so long to get the skills up to an adequate level.
> ...


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## Firefly (21 Mar 2012)

Hi One,
Some good points there. Whilst I agree that these oil companies would not benefit over the long term from engaging in tax fraud, I think they use every trick in the book to reduce their tax bill, which, once legal they are quite entitled to do. 

However, would it not be far easier and transparent to simply charge a fixed % of the world crude price of oil as a tax on each barrel of oil extracted (off the top - no deductions) and remove corporation tax for them entirely? This would ensure an index-linked source of revenue for the taxpayer and also provide the oil co with a guaranteed fixed cost after which they keep the remainder. At least then as taxpayers we know we are getting something for every barrel produced.

Firefly.


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## Latrade (21 Mar 2012)

I accept the profit argument, but share value is just as important and that's based on more than just profit, such as reserves of oil and earnings. What I think is being misunderstood here is that I'm not talking about fraud in any way shape or form. It's all perfectly genuine and legal, but to my knowledge it hasn't been clarified what can and can't be off set. There are other industries and businesses that legitmately take advantage of a lack of clarity to off set more as a cost in similar circumstances than most people would generally feel is appropriate. 

It doesn't mean they'll never be in profit, it just gives scope that for a good few years they could not be paying any tax. Who knows if those years will turn out to be minor or if they are the best years of the rig.

As to the labour, this is the unknown. To really have locally resourced labour, we need to start upskilling now. It'll be at least 4-5 years for direct labour, possibly even longer. Not saying it'll never happen, but just we won't see an immediate benefit and, depending on the life of the reserves, it isn't clear to me if the eventual boost to the local economy is balanced by what we gave away in incentives. 

We could have long term labour (imported) that stay and settle here and provide that boost to a community, but also in services to those. However, that doesn't always happen. Sometimes the companies prefer to construct compounds (almost military like) to house their staff, other times because of shift patterns (can be two weeks to a month on the rig and then two weeks to a month off at home), staff don't live in the local area and just commute to the rig when working. I know people who work off Aberdeen, but live in the North West of England. Aberdeen's boost is when they finish their shifts and essentially go on a bender for a couple of nights before going home. It's a boost alright, but like St Patrick's day is a boost. We get the money, but we don't factor in the clean up, increased security, etc.

If the reserves are long term, then we should see some benefit from this. However, and it is only my opinion at this stage, I'm sceptical that the eventual benefits will outweigh what we gave away in incentives. While we are competing with other oil areas, we could have got a much better deal without putting the companies off. Those companies aren't as reluctant to explore as you'd think and aren't as relunctant to invest as much money as necessary as you'd think. If it was hinted that Mars could contain oil, we'd be there already. 

New reserves in new areas. Reserves that don't rely on very powerful, very influential countries or regions, that's as much incentive as these companies need at the moment.


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## One (21 Mar 2012)

Let’s use the Corrib Gas Project as a source of information to illustrate our various points. The Corrib Gas Project has investment from three companies. Shell Ireland (45%) is now the lead partner and operator of the joint venture with Statoil Hydro Ltd (36.5%) and Vermilion Energy (18.5%).

This means that Shell Ireland construct and operate the gas terminal, using investments from all three companies. The three companies all then take a profit in the ratios outlined above. All three companies will have their own financial auditors and regulators.

But before any profits are distributed these three companies are entitled to receive payment for all the money they invested. To make things simple, they are entitled to every cent they invested for everything and anything before they starting paying tax. €3BN has been invested to date. So €3BN will be paid back. That €3BN is declared to the public on documents lodged in the Company’s Registration Office in Dublin.

A truthful fact about a gas field is that nobody, not even the experts can predict exactly how much a gas field is worth. The field can last well over a decade, and gas prices will fluctuate. The gas field can actually have much more gas or much less gas than is predicted and the volume isn’t even known until the field is operational. That means when the wells are drilled and gas is coming out. Not all of the gas in the field is recoverable. If they get 90% of all of the gas out then they have done a great job. But, for the sake of this discussion let us say the value of the Corrib gas field is worth €15BN.

Then €3BN will be paid back to the three companies. Then they will start making profits, and then they will be taxed. 25% of the remaining €12BN is €3BN. Therefore the Irish taxpayer will take €3BN if the Corrib gas field is worth €15BN. The Irish taxpayer will take €6.7BN if the Corrib gas field is worth €30BN.


I know I am probably simplifying the numbers here, but I don’t think I am too far wrong either.


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## One (21 Mar 2012)

I am going to try to persuade you that if you are a managing director of a company that Ireland is not a great place to explore. (These reasons are the reasons I think that the coast of Ireland is not full of companies with rigs drilling wells.)

You are much more likely to find commercially viable field off the coast of Norway and in The North Sea. Norway has gas 31 fields. Denmark has gas 20 fields, the U.K. has gas 100 fields, Holland has gas 100 fields and Ireland has 4 (after only 40 years of exploration). 

The size of some of the fields you will find off the coast of Norway and in The North Sea have been much larger than off Ireland. I have listed nine of the top fields in Norway, five are smaller than Corrib. Four are considerably larger. See the link. http://www.reisenett.no/norway/facts/economy/oil_producer.html

The infrastructure in that area of the world allows you to get to a profit making stage far quicker than in Ireland. I think a commercially viable field off Dalkey in Dublin was being looked at last year. The odds are that no oil will come from that for years yet, if ever. The Corrib saga has gone on for years.

*Norway (31 Fields)*​*Times Bigger Than Corrib*​1​Byggve  gas field
0.3% smaller​2​Frigg gas field
7​3​Heimdal gas field
0.05% smaller (1/20)​4​Ormen Lange (gas field)
11​5​Skirne gas field
0.3% smaller​6​Sleipner gas field
2​7​Snøhvit
0.5% smaller (1/2)​8​Troll gas field
25​9​Vale gas field
0.05% smaller (1/20)​


Why would you come to Ireland when other areas are more fruitful?


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## One (21 Mar 2012)

If I was the Minister of Natural Resources today, I would throw a coat over my head as I walked in and out of Leinster House so as not to be seen, and I would continue with the terms and conditions that we currently have. I would believe I was doing the right thing for the Irish people, being mindful of those people lying on trolleys in hospitals, of emigration and mass employment, of the sick and the elderly. I would think I would have a very hard time of convincing the Irish public of this (and that is why I would cover my head, lol), but I would persevere. 

Exploring off the Irish coast is the same as buying a €20M lottery ticket. The odds of winning are 4 (fields) / 156 (wells drilled) = 2.56%. It will take years after you scratch your winning lottery ticket before any profit is made. 

€35 million has already spent on the consultation process for the new Children’s Hospital, without a brick laid or a location sorted yet. Families all around the country need that hospital badly and need it 'yesterday'. Every family in Ireland has been affected someway by cancer. We need more centers of excellance and earlier detection. If you had €20M in the morning and sat in Government where would you spend it? I would be spending it on that hospital, and not off the coast of Ireland on wells that have proved very barren over the last 40 years. That is for sure.


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## One (21 Mar 2012)

Latrade said:


> Those companies aren't as reluctant to explore as you'd think and aren't as relunctant to invest as much money as necessary as you'd think. If it was hinted that Mars could contain oil, we'd be there already.


 
This is the part we disagree on. You have to justify this. I will try to justify my opinion here. At the end of 2011 we gave 13 companies licences to explore and drill. What will probably happen is that 50% of those companies will turn around in a year and hand the licences back without drilling any wells at all. That is what has happened for the last 20 years. Then you might have some of the remaining companies that will drill some wells, which is indeed what we want. They might find something, and hopefully they will! The odds are that they won't. Again, we have only 4 fields from 40 years exploration! Time will tell. I don't hear of Statoil, Shell, Exon, BP or Esso having dozens and dozens of rigs drilling off our coast, while at the same time people say we have given our reserves away for free. There is a contradiction in that. Some people say we have given all of our abundant natural resources away, but yet the Irish coast is not flooded with offshore exploration. The Irish media sometimes don't make sense to me!


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## One (21 Mar 2012)

Firefly said:


> Hi One,
> Whilst I agree that these oil companies would not benefit over the long term from engaging in tax fraud, I think they use every trick in the book to reduce their tax bill, which, once legal they are quite entitled to do.


 
Yes, and I agree with you that they are entitled to do that. And they should do that. And every company (and every individual) should do that. And foreign companies invest in Ireland to do that all the time. Any my favourite band U2 do it as well, and why not? Good luck to them. Bill Gates does it with Microsoft, and he donates millons of euros to the poor. He is a very admirable man indeed.

I try to reduce my tax bill by having a car with a small engine, by claiming back on medical expenses, etc. As long as it is legal everyone should do it. I think there is millons of euro that the taxpayer does not calim back from the revenue every year that they shoudl claim back. There ain't no shame in being tax savvy.


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## One (21 Mar 2012)

Firefly said:


> However, would it not be far easier and transparent to simply charge a fixed % of the world crude price of oil as a tax on each barrel of oil extracted (off the top - no deductions) and remove corporation tax for them entirely? This would ensure an index-linked source of revenue for the taxpayer and also provide the oil co with a guaranteed fixed cost after which they keep the remainder. At least then as taxpayers we know we are getting something for every barrel produced.


 
It is a fair point. But the corporation tax does serve us well with all the other industries in Ireland. All corporation tax is based on profits made (I think). There is no reason for it not to work well within the oil and gas industry.


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## Latrade (21 Mar 2012)

One, 

I'm not sure what your posts are getting at, I don't deny that we needed incentives I just think we gave too much away in haste, so much so that I don't think we ever really get the full benefits of the drilling either in direct taxation or in direct and secondary services. 

The reason why Ireland has become more interesting to the oil companies is filled with technical developments and political. The government moved too soon and didn't realise that they would actually have the upper hand.

Exploration has become much more accurate and reliable, and as technology improves, cheaper. 

It isn't new that there are reserves off the coast, it has just always been the case that the technology didn't exist to find and access those reserves in an economic fashion. Here's the crunch (and why the Mars analogy was right): they developed the technology so that they could get at those reserves, they wanted to and want to get it. 

It wasn't a case that the government went begging for the companies to come here, they were already interested, but needed convincing as to the finer details. Burke and then Ahern jumped the gun and went in with a very low offer. 

And that's the argument, not that there shouldn't have been incentives, just that the deal shouldn't have been so biased to the other side. That perhaps some greater consideration should have been given (than I can see) to the actual pay back period for the state. 

The deal is symptomatic of the politics at the time.


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## csirl (21 Mar 2012)

In todays British Budget, it was announced that companies that do North Sea exploration will get £3bn from the UK Government.


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## Chris (23 Mar 2012)

Excellent and well researched posts One!



One said:


> Protestors say that the government has given away €580BN of Irish resources. I would love for them to point to exactly where those resources are, who owns them, and what wells all these resources are been taken from! The reality is that the figure of €580BN has been proposed by some loony toon of an economist and then circulated as a truthful respectful value.


That point always baffles me. It is like they are arguing that the energy companies simply pull up with a boat and load up some resources. By the same line of argumentation you could say that a cabinet maker selling a wooden cabinet is exploiting us because he is taking Irish resources (wood) and then not returning all/most of the profit to the government. If it were that simple to make a profit in Irish oil and gas then even politicians should be able to do it themselves.



One said:


> The government gives as many incentives as they can to invest.


I would rephrase that and say that the government simply gets out of the way, which makes things easier for the companies involved. When politicians talk of incentives it always sounds like their actions bring on a positive outcome, when in fact it is their inaction that results in the positive effect.



One said:


> Sorry, but I don't know how you can credibly justify that remark.



I agree. Oil companies are in the business of making profit, and just like any other company, business expenses should be written off against tax. It would make no sense whatsoever to increase exploration and shutting down costs to such an extent as to declare zero profit. the more profitable an investment is the better it is for the owners.


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## Purple (24 Mar 2012)

Latrade said:


> I'm not sure what your posts are getting at, I don't deny that we needed incentives I just think we gave too much away in haste, so much so that I don't think we ever really get the full benefits of the drilling either in direct taxation or in direct and secondary services.


 If the deal is that good then why isn’t the West coast full of exploration rigs?




Latrade said:


> The reason why Ireland has become more interesting to the oil companies is filled with technical developments and political. The government moved too soon and didn't realise that they would actually have the upper hand.


Same answer; why isn’t the West coast full of rigs?
The recovery technology has improved but that also makes it easier to access oil in other locations (and re-visit old reserves). The fact is that ultra- deep water drilling is very expensive and there’s lots of oil that’s cheaper to get at, especially since oil shale recovery technology (Fracturing) has been developed.    





Latrade said:


> It isn't new that there are reserves off the coast, it has just always been the case that the technology didn't exist to find and access those reserves in an economic fashion. Here's the crunch (and why the Mars analogy was right): they developed the technology so that they could get at those reserves, they wanted to and want to get it.


 The Mars analogy is correct but you’re forgetting that there’s still loads of oil here on Earth.



Latrade said:


> It wasn't a case that the government went begging for the companies to come here, they were already interested, but needed convincing as to the finer details. Burke and then Ahern jumped the gun and went in with a very low offer.
> 
> And that's the argument, not that there shouldn't have been incentives, just that the deal shouldn't have been so biased to the other side. That perhaps some greater consideration should have been given (than I can see) to the actual pay back period for the state.


Back to my first point; if the deal was that good then why is there so little exploration taking place here?


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## Purple (24 Mar 2012)

I just found this from Ronan Lyons.


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## dockingtrade (24 Mar 2012)

Isnt Rockall where all the oil is and we'll have to got to war with britain, iceland and denmark to get it


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## One (26 Mar 2012)

Latrade said:


> One,
> 
> I'm not sure what your posts are getting at.


 
I don’t mean to niggle at anyone. It is just that this subject has caused a lot of tension, fighting and bad feeling where I live. I can’t understand why high-profile economists, journalists, well paid T.D.s, etc., can go on television and say things that are not true. It is a sore topic. This thread was one place where at least I could have my say. I probably went on too much. No offence meant.


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