MAOR urges Minister not to grant oil & gas exploration licences for the Rockall Basin

national | environment | press release

Wednesday May 06, 2009 06:53

by MAOR

Donegal and Derry based lobby group MAOR have urged the Minister for Communications, Energy and Natural Resources Eamon Ryan TD not to grant Frontier Exploration Licences for oil and gas exploration off the West Coast of Ireland.

Donegal and Derry based lobby group MAOR have urged the Minister for Communications, Energy and Natural Resources Eamon Ryan TD not to grant Frontier Exploration Licences for oil and gas exploration off the West coast of Ireland. In a letter to the Minister, members of MAOR expressed their “utter disbelief and dismay” at Mr Ryan’s opening of a new round of applications for Frontier Exploration Licences in the Rockall Basin.

The group stated that they feel Minister Ryan’s “decision to invite applications for new licences was untimely and inappropriate given the outstanding issues with the Corrib Gas field.” The MAOR members added “given the lack of meaningful benefits to the Irish State from the current licensing and fiscal terms (1992 and 2007), a new round of applications should not have been opened without public discussion with the people of Ireland.”

Minister Ryan opened the round of applications for Frontier Exploration Licences in the Rockall Basin in late 2008. This round was closed in April and the Minister has stated that he intends to make a decision on the received applications in June.

In their letter to Ryan, members of MAOR stated that “to grant these licences will essentially amount to an act of economic treason as if, and when, these licence holders eventually decide to begin commercial production in the Rockall basin, the Irish people stand to lose a potential source of hundreds of billions of euros worth of gas and oil.”

Citing a Petroleum Affairs Division report from February 2009, MAOR highlighted that accounts by the DCENR suggest that there is a potential 10 billion barrels of oil equivalent in basins west of Ireland. Given the fluctuating price in oil over the past year, the group estimated the value of this potential 10 barrels to range from €350 billion to €900 billion.

The letter writers maintained that the Irish state will not benefit from this asset, however, as for petroleum lease holders there is ‘no state participation or royalties; no signature or production bonuses; 25 % corporation tax; 0-15% Resource Rent Tax for the more profitable fields; and generous write-off provisions’ (Petroleum Affairs Division, February 2009). “The ‘generous write-off provisions your [Ryan’s] Department outlined is a mild understatement as companies can offset their costs against the tax rate meaning that they will have to pay little or no tax.”

If these Frontier Exploration Licences are granted, after which companies will complete their period of exploration and may be granted a petroleum lease by the DCENR, “we the Irish people will see very few benefits from the potential hundreds of billions worth of our hydrocarbons. This is an outrage when on one hand the Government is cutting back on essential services and on the other, they are freely giving away the rights to hundreds of billions of euros. To add further insult to injury, we the Irish people are not even guaranteed a supply of our own resources and will have to pay full market prices for our oil and gas” maintained the group.

The group implored Minister Ryan “not to take the drastic step of granting further Frontier Exploration Licences in the Rockall Basin, or any other offshore area. Furthermore, we appeal to you to put a moratorium on all exploration licences and petroleum leases until the Government establishes licensing and fiscal terms which result in real benefits for the Irish State.”

“We believe that the Government must develop a new system of licensing and fiscal terms in active consultation with the Irish people and subject to a public referendum. The give-away of Irish gas and oil has continued for far too long and has resulted in many negative outcomes for the Irish people. Enough is enough and before more communities suffer, we urge you to take the first step in rectifying the situation by not granting further Frontier Exploration Licences” concluded members of MAOR.