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Suspend Oil and Gas licences applications off Donegal Coast

11 April, 2006

Donegal Sinn Fein county councillor Pearse Doherty has called for the suspension of the Frontier Exploration Licences applications off the coast of Donegal. Councillor Doherty has demanded an immediate review of the present terms and conditions that apply to these offshore oil and gas exploration licences.

Cllr. Doherty said

"I find it quite remarkable that this government has sought and accepted five applications for oil and gas exploration off the Donegal coast in which the highly flawed 1992 licensing terms for offshore oil and gas exploration and development will apply. The 1992 Gas exploration legislation is extremely flawed and represents an extremely bad deal for the Irish People. The deal gives no royalties to the government and an extraordinarily low rate of tax, all of which can be written off.

"At the time of this legislation it is reported that former Minster Ray Burke, against the advice of senior officials in his department, held a meeting on his own with the oil companies after which the terms and conditions previously attached to licenses were changed dramatically in favour of the companies.

"This flawed legislation effectively ends any hope of Ireland benefiting from what Nature has provided for her. An oil tax rate of 25% was introduced, the lowest in the world, all of which can be written off. The abolition of royalties and all other production- related levies was agreed and the fatal flaw of no commitment by the oil companies to use any Irish jobs, goods or services, means that this vital national resources only benefits the oil companies who will in turn sell us back our own resources giving Ireland little if any economic spin.

"I acknowledge and welcome that the application by Grianan energy offers a tangible difference to the other applications. This Donegal based company have agreed to allocate 10% of their profits to an independently run charitable trust that will invest this money in infrastructure, health and education projects in Donegal and the west of Ireland. However Grianan energy Ltd are only one of the five applicants for these licences, and none of the other four share the same social conscience as the Donegal based company does. Therefore the only way to ensure that Donegal benefits is to change the term and conditions to ensure that all companies that are allocated licences pay their fair share to the state and also bring benefits to the local economy.

"Sinn Féin have consistently challenged the government to suspend these current round of applications which are only 40 kilometres of the Donegal coast until terms and conditions could be agreed that would benefit the Irish people. We need a major review of the 1992 legislation and until such times as this happens the Government must put the interests of the Irish People before the corporate interests of the oil and gas companies.

"The Marine Minister Frank Fahey, in 2001, said that in the event of a significant discovery off the Donegal coast during that year that the Government would seriously consider changing the 1992 oil and gas legislation. Yet in 2003 the junior minister for the marine John Browne speaking in relation to the exploration of the coast of Donegal said that results clearly demonstrate the presence of a working petroleum system and, as such, have profound implications for the future exploration.

"There is no doubt that with proper terms and conditions any oil or gas find of the Donegal coast would have massive benefit for Donegal. However it is reckless in the extreme for Minster Dempsey to issue new licenses without first carrying out a major review of the 1992 legislation. The time has come for this Government to start putting the interests of the Irish People before the corporate interests of the oil and gas companies. In the present economic crisis we must have a clear explanation from the government with regard to their handing over of potentially billions of euro worth of Irish resources that will be of little benefit to the Irish state and I am calling on the government to suspend these applications until a full review has been conducted. ENDS

Note for editors

Press release Dept. of Communications, Marine and Natural Resources

Dublin, 23 March 2006

The Minister for Communications, Marine and Natural Resources, Noel Dempsey T.D., today announced that five applications had been received for Frontier Exploration Licences in the Frontier Sylne/Erris/Donegal Licensing Round by the close of the deadline at 12.00 noon on Wednesday 15th March. These applications are now under consideration within the Department.

The Minister was pleased with the number of applications and the number of blocks applied for - 6 full and 10 part blocks (see attached map) - and saw this as being due to a number of factors including the industry's confidence and commitment to exploration offshore Ireland, the current high energy prices and the work of the Department in promoting exploration offshore Ireland.

The Minister hoped the outcome of the Round would lead to the discovery and development of new hydrocarbon resources and reduce Ireland's present high level of dependency on imported energy. The five applications received were from four companies, applying for various blocks in the licensing area. The applications received were:

1. Statoil Exploration (Ireland) Limited with Shell E. & P, Ireland Limited as a partner.

2. Serica Energy (UK) Ltd.

3. Island Oil & Gas plc with Lundin Exploration BV and Endeavour Energy (UK) Ltd. as partners.

4. Island Oil & Gas plc with Lundin Exploration BV and Endeavour Energy (UK) Ltd as partners.

5. Grianan Energy Ltd.

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