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Ferris welcomes Gas Amendment Bill 2008

19 November, 2008 - by Martin Ferris TD


Sinn Féin Energy and Natural Resources Spokesperson Martin Ferris TD has welcomed the Gas Amendment Bill 2008 as a contribution to increasing the capacity of one of the most successful public enterprises in this state. Speaking in the Dáil today Deputy Ferris said the massive oil and gas reserves off our coast could have huge potential if the state makes radical changes to how the sector is controlled and how the revenues from the sector are channelled.

Deputy Ferris said, "There are estimates, including one from the Petroleum Affairs Division of the Minister's Department that there are 10 billion barrels of oil lying off the west coast of Ireland, valued at an astonishing 700 Billion dollars at the price of $70 per Barrel. That is in addition to a natural gas reserve - estimated to be 50 trillion cubic feet - sufficient to supply the whole of western Europe for some time.

"200 kilometres off the coast of Kerry lies the Dunquin gas field which is estimated to contain 25 trillion cubic feet of natural gas and 4,130 million barrels of oil. The gas alone would meet our gas needs - at present consumption levels - for the next 62 years. Dunquin is licensed to Exxon and partners who estimate that it will come on stream after 2013.

"Off the coast of Clare there is the Spanish Point field with known reserves of one and a quarter trillion cubic feet of gas and 206 million barrels of oil, valued at €30 billion. That is hoped to begin production in 2011 with the gas piped ashore. And then of course off Mayo is the Corrib field which has an estimated value of anywhere between €12 billion to €100 billion euros.

"While this is good news, particularly at the present time of economic uncertainty and concerns over energy supplies, we need to be concerned over the manner in which this huge resource will be developed and the benefits that it will bring to the Irish people.

"Unfortunately, because of the ludicrous and indeed dubious deal handed to the multinationals in 1992 the people of Ireland would gain very little from our oil and gas wealth under the current arrangements.

"The extent of the reserves off our coast places us in a unique position with regard to future supply, costs and overall benefit to the Irish people. However, that will not be realized unless the Irish state makes radical changes with regard to how the sector is controlled and how the revenues from the sector are channelled." ENDS

Full text of Deputy Ferris' speech follows:

I welcome the Bill as a contribution to increasing the capacity of one of the most successful public enterprises in this state. It is also hoped that the increased activity of Bord Gáis in the energy sector will provide a much needed boost to the economy and to employment in general at the current time.

There are, however, a number of points that need to be made in relation to the whole issue of energy in this country, and in particular with regard to the gas reserves which lie, for the greater part unused, off our coast.

There are estimates, including one from the Petroleum Affairs Division of the Minister's Department that there are 10 billion barrels of oil lying off the west coast of Ireland, valued at an astonishing 700 Billion dollars at the price of $70 per Barrel. That is in addition to a natural gas reserve - estimated to be 50 trillion cubic feet - sufficient to supply the whole of western Europe for some time.

200 kilometres off the coast of Kerry lies the Dunquin gas field which is estimated to contain 25 trillion cubic feet of natural gas and 4,130 million barrels of oil. The gas alone would meet our gas needs - at present consumption levels - for the next 62 years. Dunquin is licensed to Exxon and partners who estimate that it will come on stream after 2013.

Off the coast of Clare there is the Spanish Point field with known reserves of one and a quarter trillion cubic feet of gas and 206 million barrels of oil, valued at €30 billion. That is hoped to begin production in 2011 with the gas piped ashore. And then of course off Mayo is the Corrib field which has an estimated value of anywhere between €12 billion to €100 billion euros.

While this is good news, particularly at the present time of economic uncertainty and concerns over energy supplies, we need to be concerned over the manner in which this huge resource will be developed and the benefits that it will bring to the Irish people.

Unfortunately, because of the ludicrous and indeed dubious deal handed to the multinationals in 1992 the people of Ireland would gain very little from our oil and gas wealth under the current arrangements. Tax rates are extremely low and most of the current 25% tax on profits can be written-off against exploration and operating costs. I appreciate that the Minister was successful in having a new rate of tax of 40% introduced but this rate only applies to new exploration licenses and doesn't cover the existing oil and gas licenses. It should be extended to all licenses to ensure that when the gas and oil comes on stream that it provides, as it can, a huge revenue boost to the country with all the implications that would have especially during an international economic downturn.

There is also the potential that the development of oil and gas can have to establish security of supply. At present we import 85% of our energy needs. We are also at the end of a supply line that extends all the way from Russia across Western Europe, Britain and finally Ireland. Which makes future supply dependent on all sorts of factors which are outside of our control. Our oil and gas reserves are a factor which we can control if we wish to.

The recent uncertainty in the international energy market, although temporarily calmed, has led to substantial increases in fuel prices which has had extremely damaging consequences for indigenous industry, for farmers and for fishermen. Not to mention the large increases in prices charged to domestic customers which has placed an added burden on household incomes.

Therefore the extent of the reserves off our coast place us in a unique position with regard to future supply, costs and overall benefit to the Irish people. However, that will not be realized unless the Irish state makes radical changes with regard to how the sector is controlled and how the revenues from the sector are channelled.

Other countries have far more control over their oil and gas and the exploration companies are happy to enter arrangements which some people in this country claim would put them off becoming involved here. That is not the experience internationally and companies are unlikely to turn their backs on the potential lies off the Irish coast because of higher tax and royalties which would bring this country into line with others.

In Norway, a state which ironically through Statoil stands to benefit to a greater extent than ourselves from the Corrib gas field, and which has a population similar to our own, the benefits of oil and gas have been massive due to the manner in which the sector is managed by the state.

For example, the Norwegians have a state pension fund of $240 billion, largely built from oil and gas revenues. During the first nine months of 2008 -while the rest of the world's economies were reeling under the impact of the stock market and bank crisis - the Norwegian Government earned $18 Billion in royalties from their oil and gas.

That is the sort of potential that exists off our coast but only if it is properly managed and the proper revenue structure is put in place of the current one which as we all know was put in place by former Government Ministers whose activities in other areas has been exposed or called into question. Their role in the handing over of our oil and gas ought also have been the subject of investigation by the tribunals.

So while we are strengthening Bord Gáis we should also be looking at expanding the interest of the country in oil and gas by strengthening the state's role and increasing the revenue flow.

We also need to ensure that the gas that comes on stream is available to people throughout the entire island. At present 18 of the 26 counties are part of the grid. There is no doubt either that if some of the exploration companies had their way that the gas would be piped out of the country in its entirety.

At the very least then we need to ensure that when the new fields come on stream that the pipeline is extended to every part of the country and that this is reflected in lower costs to consumers. It would surely be a ludicrous situation in which the predicted scale of the gas being taken form off our coast did not even bring that benefit.

To conclude then, I welcome the boost which this Bill will provide for Bord Gáis and hope that not only will it allow them to expand its operations for the benefit of the consumer and the economy overall, but that the Minister engages in more hands on initiatives in the energy sector particularly in relation to the issues I referred to.

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