Own Our Oil is calling on newly-appointed Minister Alex White to instigate an immediate review of Ireland's oil and gas strategy - which at present is merely relying on easily-avoidable taxes to bring some benefit to Ireland from the exploitation of Irish natural resources. Especially in light of ongoing geopolitical developments and concern over supply, the time is now for Ireland to secure a better future through correct management of Irish natural resources.
Some progress has been made recently, but this is just further evidence that the existing Irish oil and gas licensing regime (which was put in place by Ray Burke and subsequently worsened by Bertie Ahern) was wrong and needs a complete overhaul. Own Our Oil is calling on Minister White and his department to have the courage which his predecessors lacked, and change the fact that Irish oil and gas licences currently grant full ownership of the resource to the licence holder. Ireland needs to move towards Production Sharing Agreements and the establishment of a National Oil Company for Ireland, to secure supply of this crucial strategic resource, which will otherwise be extracted and exported with no benefit to Ireland. According to the World Bank, 75% of global crude oil production is through national oil companies. Ireland needs to learn from the long history of established hydrocarbon-producing countries to avoid another Irish debacle.
On June 18th, at a conference in Dublin Castle on “Harnessing Our Ocean Wealth”, the then Ministers Rabbitte and O’Dowd revealed revised terms for oil and gas licensing in Ireland. The terms are based on recommendations made by consultants Wood Mackenzie, who were appointed by Minister Rabbitte to review only the existing fiscal terms of Irish oil and gas licences. Own Our Oil had inputs to that review process and the resultant report outlines which of our recommendations form the basis of this new direction in licence terms.
It was a positive development, but really only a step in the right direction for Ireland. The consultants themselves admitted to us that the remit of the review was so narrow that it did not give scope for the sort of change needed to really address the issue of Irish oil and gas licensing. Ownership of Irish resources is still granted to the licence holders, even though the consultants’ report recommends on p15 that Production Sharing be considered as part of a proper and full review of Ireland’s licensing regime.
Subsequently, a change of the guard in the Department of Communications, Energy and Natural Resources saw TDs Alex White and Joe McHugh ushered in. The hope is that their fresh thinking will herald a new direction for the Irish Petroleum Affairs Division.
We will be building on these milestones to continue to work towards getting the best possible deal for Ireland from Irish natural resources. With the momentum of the people of Ireland this is very achievable, so we are relying on everyone to get informed and spread the word.
Ireland's oil and gas licensing terms are based solely on taxing operator-declared profits. Ireland's track record and global image in the corporation tax context does not offer much to inspire confiidence that Ireland will actual stand to gain much (if anything) from that approach.
That is a real problem when it is Irish natural resources which are being exploited in return for nothing but a nominal tax take. It reflects the irresponsible stewardship of finite resources which we should be using to secure a better future for generations of Irish to come, not private shareholders of tradeable commodities.
The Challenge is to change Irish oil and gas licensing terms to benefit Ireland.
The question is not whether Ireland has viable deposits of oils and gas, it is why have we transferred ownership to private industry for so little?
Under existing licences, the Irish exchequer would receive little or no return from the exploitation of our natural resources. Those licences grant total legal ownership of our potential oil and gas fields to licence holders. The only people benefiting from whatever is produced under those licences will be company shareholders. A considerable percentage of Irish prospects have already been licensed/optioned - cherry-picked based on available seismic data.
"Alex White, the new Minister at the Department of Communications Energy and Natural Resources (DCENR) takes over responsibility for Irish energy policy at a time when the strategic competence of the DCENR may be more important to our lives than the tactical competence of the Department of Finance.
Energy is the feedstock into the global financial system. Money itself is worthless paper, its value is in the real assets we believe it can translate into when we cash in the chips. If you accept that energy, its production, whether hydrocarbon or alternative and its distribution is the root system sustaining the perceived value of modern money, then why give that power away to private companies owned mostly by tax non-residents?
Minister Alex White ought to consider a wholesale strategic review of national policy preceded by a comprehensive energy audit of the economy. There already is a broad hint to do so contained in the recent Wood Mackenzie report that specifically recommended looking at switching to Production Sharing Contracts as a substitution for licences which pass over ownership in the vague hope of future tax revenues and the establishment of a national oil company which could partner with private companies while building its own competences, much like Statoil did for Norway.
We have received great ideas, insights, encouragement and support from all over Ireland and from further afield. For that we thank you all, but we must keep growing rapidly and spreading the word - it is getting through to people quickly and soon it will be getting through to our politicians. Everyone can help in this first and most vital task of adding to the numbers of people who want a better deal for Ireland from our oil and gas licensing terms.
We are pooling the volunteered insights and expertise to put them to their best use. You can be part of this from square one. Please make sure to register your interest and any insights on our "get invOOOlved" form on the top right, so that we can be sure not to leave you out as developments arise. Thank you.
Ireland's history is littered with examples of poor natural resource management. Our oil licensing mismanagment stretches from the 1950s to today. We now stand at a crossroads, with the opportunity to make amends.
However if we don't act urgently, we will look back and wonder why...
"There will be jobs, loads of jobs….” This is a myth. Oil prospecting companies are under no obligation to create Irish jobs under the licensing terms. Jobs will likely be filled by skilled workers from overseas while refining of oil will probably be carried out in the UK or Holland.
Thank you for your interest in this vitally important issue for Ireland.
The change that is needed will come from the grassroots up. We need local communities to get involved and get informed of the issues. Please contact us through the "get invOOOlved" form on the top right here to let us know what your ideas are.
Together we will make this happen.