# oil licences given away by government again



## joe sod (24 Aug 2006)

Just read in the daily mail today that the government has given away more licences to oil companies with the same controversial conditions it gave away the corrib field (albeit before it was discovered). They will be allowed to search for oil in irish waters in an area as large as Northern Ireland (25,000 square km). Basically they collect no royalties from any potential discoveries. The only amount paid is corporation taxes of 20% on profits made from exploiting any discovery and they will be able to write off any costs entailed in prospecting before they pay any tax. They are not even obliged to sell the oil even at market prices to ireland and can load it onto tankers and sell it to who ever they like. Noel Dempsey promised that the procedure for issuing licences would be reviewed. However this seems to have been rushed through with no press release. It just appeared on the department website at 6am on saturday morning. This is just a summary of what I read today in the daily mail. No western democracy imposes less conditions on oil companies prospecting for oil than ireland...


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## thewatcher (24 Aug 2006)

Does anything that this govenment does surprise anyone anymore,not me anyway !.


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## room305 (24 Aug 2006)

We don't have many great oil prospects so it is clear major incentives are needed if companies are going to do so.

Personally I would set an upper limit on the 0% royalties commission. The Corrib gas field is absolutely enormous - some €50 billion worth of gas could be taken from the field - so once the money made from the gas extracted by companies like Shell has exceeded a certain amount (say €20 billion) they would pay royalties on the rest of the gas extracted.

In this way we do not disincentivise exploration but we don't essentially give away a huge potential asset like the Corrib field.


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## joe sod (24 Aug 2006)

"In this way we do not disincentivise exploration but we don't essentially give away a huge potential asset like the Corrib field."

its not our asset its owned by shell, all shell have to pay is tax on profits after deducting exploration costs. Because of the corrib field the chances of finding more are greatly enhanced


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## thewatcher (24 Aug 2006)

The corrib gas belongs to the irish people not shell,look what the boys in south america did.
I think a law should be brought in that any contracts signed by a politician that was later proven to be corrupt should be null and void and thus open up to renegotiation.You don't have to do it but you have an option.
Don't tell me this couldn't be done,ray burke is a prime example.


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## bearishbull (24 Aug 2006)

You need the big companies to develop these fields but they are getting too much , any profit after all normal expenses should be split 50:50


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## Guest107 (24 Aug 2006)

ah Dempsey Demspey Dempsey, what a guy. The next Taoiseach !!!!


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## CelloPoint (25 Aug 2006)

And any expenses that Shell et. al. incurr in exploration (including the cost of exploration rights), they just write off against tax. We should do a Hugo Chavez on this country (or at least adopt a little bit of what he does).


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## room305 (25 Aug 2006)

CelloPoint said:


> And any expenses that Shell et. al. occur in exploration (including the cost of exploration rights), they just write off against tax. We should do a Hugo Chavez on this country (or at least adopt a little bit of what he does).



That's a good idea. I'm sure there are plenty of other dictators we can cherry pick economic policy from as well.


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## polaris (25 Aug 2006)

CelloPoint said:


> And any expenses that Shell et. al. incurr in exploration (including the cost of exploration rights), they just write off against tax. We should do a Hugo Chavez on this country (or at least adopt a little bit of what he does).


 
I think you'd get a more positive response to this proposal over on Indymedia


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## bearishbull (25 Aug 2006)

CelloPoint said:


> And any expenses that Shell et. al. incurr in exploration (including the cost of exploration rights), they just write off against tax. We should do a Hugo Chavez on this country (or at least adopt a little bit of what he does).


Yeah the multinationals would love that and continue to invest here for the long term 

The economy would be fecked if these multinationals left.


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## autumnleaf (25 Aug 2006)

room305 said:


> We don't have many great oil prospects so it is clear major incentives are needed if companies are going to do so.


 

Yeah, because without significant incentives they'll just turn up their noses at us. "Oil! We don't need your stinkin' oil! We may have bribed and supported dodgy regimes in other parts of the world, but you Irish and your insane demands to keep some of the profits from your resources for yourselves, why that is all too much!"

It's in the ground, under our territory. It's not like an IT or pharma co. that can relocate to somewhere else if we don't provide enough incentives.

I mean, it's oil! Black gold, texas tea, the stuff the entire western world depends on. For the next few decades anyway we are dependent on the stuff to move us about, keep us warm, feed us for goodness sake. (Of course alternative sources of fuel and energy are being developed, but we have a while before we can be fully weaned off the stuff). 

Oil companies are about to enter a massive grab for every and any reserve they can get, and they will pay big bucks for it, and we have just signed a deal to give it all away. Even worse, they have no incentive to sell it to us first. We can continue to be dependent on our energy from the Middle East (you think they'll be getting any stable govt's there anytime soon?) while our own fuel is being siphoned off to other countries.

Never mind Venezuela - do you think Britain or Norway would have signed a deal that gave them so little control over their natural resources?


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## z107 (25 Aug 2006)

Why couldn't we just copy exactly what Norway did?


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## Guest107 (25 Aug 2006)

We cannot do a Norway , they found their oil in shallower water and very easily

Irelands oil (if present) is in deep water . Expensive to extract . Look at the map, most of these are bloody miles out and with no pipeline network or anything to plug into. If they were in the Irish sea you may have a reason to complain I will concede.

http://www.dcmnr.gov.ie/NR/rdonlyres/7C322A26-8674-43C4-AE86-AC3DD289C0FF/0/sedlicensingroundmap.pdf

Once we do get some extraction going we can then change the terms of the exploration licences


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## CelloPoint (25 Aug 2006)

2Pack said:


> We cannot do a Norway , they found their oil in shallower water and very easily
> 
> Irelands oil (if present) is in deep water . Expensive to extract . Look at the map, most of these are bloody miles out and with no pipeline network or anything to plug into. If they were in the Irish sea you may have a reason to complain I will concede.
> 
> ...



Mechanical engineering has advanced hugely in the oil exploration area. It is now possible to drill to very deep levels. And besides, with oil prices at their present levels, it is now financially feasible to use the latest expensive engineering methods to extract oil from great depths.

I believe strongly that the Irish people have been undersold by an incompetent (if not corrupt - this wouldn't surprise me at all) government.


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## hmmm (25 Aug 2006)

So the two options we have are:
1. Let the oil & gas lie there untouched or
2. Create an attractive tax regime that will encourage energy companies to spend vast amounts trying to guess where oil & gas may be found, and in return the state takes 20% of any profits.

Or do you propose that SIPTU and the Socialist Workers party have a skillset that will enable them to survey, prospect, transport and sell these national resources?


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## thewatcher (25 Aug 2006)

hmmm said:


> So the two options we have are:
> 1. Let the oil & gas lie there untouched or
> 2. Create an attractive tax regime that will encourage energy companies to spend vast amounts trying to guess where oil & gas may be found, and in return the state takes 20% of any profits.
> 
> Or do you propose that SIPTU and the Socialist Workers party have a skillset that will enable them to survey, prospect, transport and sell these national resources?


 
They are just the two options you have presented,i would contend the people could/should get a lot more than 20% of the profits after millions and millions of tax write off's for "exploration".Have you never run a small business,they are always advised to declare as little profit as possible,once again the politicans have robbed the people of this country !.


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## Guest107 (25 Aug 2006)

20% of feck all is feck all.

lets revisit this whole issue when Oil is found in decent quantities and when Shell build that bloody pipeline around the people not thru them.


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## CN624 (25 Aug 2006)

Its a very very sweet heart deal. Nobody is saying they should be taxed prohibitively but this deal is giving away a national resource far too cheaply.

Another thing that annoys me about this is the government saying we need this to secure our energy requirements into the future. Thats just bull. We will have to buy it back on the open market as if it came straight from Iraq.


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## room305 (25 Aug 2006)

thewatcher said:


> They are just the two options you have presented,i would contend the people could/should get a lot more than 20% of the profits after millions and millions of tax write off's for *"exploration"*.Have you never run a small business,they are always advised to declare as little profit as possible,once again the politicans have robbed the people of this country !.



The quotations around exploration imply you think it is of dubious merit. Are you suggesting that the oil and gas exploration companies know exactly where the oil and gas is located but faff about spending millions looking in other areas as part of an overall tax reduction strategy?


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## jrewing (25 Aug 2006)

Irish exploration successes lie somewhere in the 1 in 50 range, compared with much more favourable odds elsewhere.

IMHO, the government needs to keep these favourable terms for the oil companies to encourage exploration. If substantial finds are made and the Irish sector becomes more attractive, the government can afford to ask for a greater slice of the cake in subsequent licencing rounds on other blocks.

People talking about "doing a Chavez" need to understand the industry a little better. We are not talking about little 500 m wells on land. Deepwater offshore fields in the North Atlantic require a lot of money, experience and technology. The Mexicans, who kicked out the oil companies many years ago, cannot develop their own deepwater resources, despite Pemex's huge experience on land and in shallow water. They are hotly tipped to ask the majors to come back precisely for this reason.

If I was an oil company, the whole Rossport debacle would put me off coming here no matter how good the financial terms were....


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## thewatcher (25 Aug 2006)

room305 said:


> The quotations around exploration imply you think it is of dubious merit. Are you suggesting that the oil and gas exploration companies know exactly where the oil and gas is located but faff about spending millions looking in other areas as part of an overall tax reduction strategy?


 
No,i'm not saying they know where the gas is but sister companies charge huge sums over and above what it actually costs to the parent company for services they provide,that's the way these things work.

The was an excellent programme on channel4 the other night on public private partnerships and how millions of british taxpayer's pounds were being funneled between shelf companies for providing little or no services.


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## ubiquitous (25 Aug 2006)

thewatcher said:


> Have you never run a small business,they are always advised to declare as little profit as possible...



By whom, exactly?


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## Guest107 (25 Aug 2006)

The Rossport debacle is entirely of Shells own making , putting odourless high pressure gas pipes near peoples houses, they would not do that in Holland or the US . 

The real lesson is that Dempsey kicked the thing out to an old trade unionist to sort out ...ie The government will do nothing for you or against you and that _uncertainty is a certainty _ .

They can live with that, if they find anything decent we can play hardball in the next licencing round .


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## CelloPoint (25 Aug 2006)

There are two extreme positions that can be taken regarding the operation of oil companies in this country.

1. Do a Hugo Chavez and nationalise oil exploration
2. Give away exploration licences for nothing + allow the oil company to run off with the citizens' national resources.

Both of this situations are just as extreme in my opinion - the thing about extremism is that when the left and the right wrap around far enough, they become the same thing.

A balance needs to be achieved that satisfies:

- the fair return to the taxpayer for the sale of a valuable natural resource
- the promotion business activity
- the environmental impact associated with oil extraction/refining
- strategic government authority over natural resources

As was said above: "securing a vital natural resource for the good of the country" is utter rubbish, as we live in an open-market scenario. The open market works both ways: If Shell et. al. wish to drill for oil in Ireland, then they must pay the fair, open market price.

The policy of the present government with regards oil exploration is a joke. If it wasn't utter incompetence in the Department of Marine and Natural Resources, then the only other way such a farce could have arisen is by corruption.


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## room305 (25 Aug 2006)

thewatcher said:


> No,i'm not saying they know where the gas is but sister companies charge huge sums over and above what it actually costs to the parent company for services they provide,that's the way these things work.



I'd be surprised. They pay 0% royalties and only 12.5% corporate tax on profits. I don't see a huge incentive there for complicated tax evasion/avoidance strategies.

Also, how is this related to public-private partnerships? The main criticism of these in the UK is that they cost more and are no more efficient than doing things publicly. However, it allows the government to stick to its own rule of not letting debt exceed 40% of GDP as PFI's are "off balance sheet" expenses. Accounting rules may be changing on that however.


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## thewatcher (25 Aug 2006)

ubiquitous said:


> By whom, exactly?


 
Accountants,i'm not talking anything illegal now.


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## thewatcher (25 Aug 2006)

room305 said:


> I'd be surprised. They pay 0% royalties and only 12.5% corporate tax on profits. I don't see a huge incentive there for complicated tax evasion/avoidance strategies.
> 
> Also, how is this related to public-private partnerships? The main criticism of these in the UK is that they cost more and are no more efficient than doing things publicly. However, it allows the government to stick to its own rule of not letting debt exceed 40% of GDP as PFI's are "off balance sheet" expenses. Accounting rules may be changing on that however.


 
Agreed,when your giving the rights away for practically nothing there's little incentive for tax avoidance strategies.


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## ubiquitous (25 Aug 2006)

thewatcher said:


> They are just the two options you have presented,i would contend the people could/should get a lot more than 20% of the profits after millions and millions of tax write off's for "exploration".Have you never run a small business,they are always advised to declare as little profit as possible,once again the politicans have robbed the people of this country !.


(Originally Posted by ubiquitous) "By whom, exactly?"


thewatcher said:


> Accountants,i'm not talking anything illegal now.



What a load of codswallop! How on earth do you think businesses can attract investment or loan facilities if they "declare as little profit as possible"? Contrary to what you say, publicly quoted companies (including exploration companies) are continually under pressure to deliver high profits to underpin their share prices. Indeed at least one major oil company has gotten into trouble in recent years for allegedly overstating declared profits, based on overvaluing the level of their oil reserves.


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## ubiquitous (25 Aug 2006)

You talk about exploration companies having "millions of tax write off's",  then a few minutes later you say that "there's little incentive for tax avoidance strategies".

I'm puzzled!


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## thewatcher (25 Aug 2006)

ubiquitous said:


> (Originally Posted by ubiquitous) "By whom, exactly?"
> 
> 
> What a load of codswallop! How on earth do you think businesses can attract investment or loan facilities if they "declare as little profit as possible"? Contrary to what you say, publicly quoted companies (including exploration companies) are continually under pressure to deliver high profits to underpin their share prices. Indeed at least one major oil company has gotten into trouble in recent years for allegedly overstating declared profits, based on overvaluing the level of their oil reserves.


 
I said a small business i never mentioned publicly quoted companies,oil companies are made up of loads of different companies the drilling/mining side charges the Irish arm for its services,this shows up as a profit elsewhere in the Group but is not subject to the 20%,that's all i'm saying.


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## thewatcher (25 Aug 2006)

ubiquitous said:


> You talk about exploration companies having "millions of tax write off's", then a few minutes later you say that "there's little incentive for tax avoidance strategies".
> 
> I'm puzzled!


 
Yes when you give the stuff away,if say the deal was 50/50 on the profits then there would be an incentive for tax avoidance.

It's no different to IRS starting to look at how the american multinationals are funneling money through their irish bases.


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## elefantfresh (25 Aug 2006)

Does anybody REALLY know how much oil/gas is out there beside us? Is it all speculation or is there actual proof of quantities? I saw earlier in this post $50 billion - is that a lot in oil terms world wide or is this literaly, a splash in the ocean?


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## Guest107 (25 Aug 2006)

Tony O Reilly , late of [broken link removed]  is involved with these prospects here

[broken link removed]

These are 'allegedly' where there is a scad of oil and gas, 140 miles out from the tip of Kerry in deep water  and even further from a harbour or an oil refinery ..... but nobody has proved anything yet. 

After the last Atlantic Resources frenzy in 1983/1984 I feel I'll give this one a miss you know !


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## joe sod (25 Aug 2006)

This is the most secretive government we have ever had. The most important issues facing this country's future are not debated or discussed by this government. The way this was information was just put on a govenment website at 6am on a saturday morning speaks volumes. They have a total disdain for democracy. The quality of debates in the dail is terrible, the taoiseach and top ministers rarely attend. At least the debates in the house of commons are full blooded. The government has more in common with George Bush and the neo cons where debate was also stifled. Have you noticed how government ministers avoid as much as they can appearing on prime time. Last night wind power and its shortfalls were being debated. No government minister was on hand to defend it even though it is a key plank of the governments future energy policy. When the killings and over crowding in mountjoy were being debated last week on the show, the department of justice declined to take part. In fairness to RTE they have beefed up their current affairs and are debating issues which are of vital importance.


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## Guest107 (25 Aug 2006)

What has that bloody polemic got to do with *OIL*, 

The worst gov't I ever saw was the crypto fascist FG/Labour 1973-1077 govt with that bloody tullymander too , awful things they were.


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