Oil find off coast of Cork
- Thread starter dewdrop
- Start date
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.
someone posted this in the comments section of the story on Breaking News.ie
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.
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.
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.
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
SoylentGreen
Registered User
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Yes I remember Atlantic Resources only too well!
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.
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.'
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.
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!
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!