Let’s get the benefits from our natural resources for the Irish people, rather than the pockets of the multi-nationals
For ORAL answer on Thursday, 17th July, 2014.
Minister of State (Mr. Joe McHugh T.D.)
Since the 1960s, exploration activity in the Irish Offshore has yielded four commercial gas fields and no commercial oil discoveries. Exploration offshore Ireland is expensive due to its remoteness and water depths. The cost of drilling a single deep-water well in the Atlantic can be in excess of €100 million. Limited infrastructure, such as pipelines, terminals and platforms, pushes up the cost of development and negatively affects the commerciality of oil and gas discoveries. As a consequence, exploration for oil and gas in the Irish offshore is both a costly and high risk investment.
The recent Wood Mackenzie Report on Ireland’s oil and gas fiscal terms considered, as alternatives to the current concession system, the establishment of a state hydrocarbon exploration company and of introducing production sharing contracts. Wood Mackenzie identify the potential benefits and risks associated with both models and concludes that at this time Government should not introduce a mandatory State participation in future licences, nor should Government change to a production sharing system.
While Wood Mackenzie recognise that an efficient State hydrocarbon exploration company could be a helpful partner to industry, the report includes a discussion of a series of risks related to issues of governance, funding, potential conflicts of interest and commercial efficiency.
It is evident from the discussion and analysis in the report that Wood Mackenzie recognise that the process of fully investigating the options and issues associated with establishing a national hydrocarbon exploration company would be a very complex process that would need to involve a broad range of stakeholders and would take a considerable time. It would have to adequately address fundamental questions such as how the cost of resourcing all of the functions would be met and in particular how the State would finance a share of any future field development costs. As a consequence, there are no plans to establish a State hydrocarbons exploration company at this juncture.