MULTINATIONAL OIL and gas companies regard Ireland as a high-risk, unrewarding and difficult place for exploration, an industry group told TDs and Senators yesterday.
Fergus Cahill, chairman of the Irish Offshore Operators’ Association, told an Oireachtas committee that Ireland falls far behind other locations, including the North Sea, when these companies decide where to invest their money.
“This is a result of the low level of commercial discoveries, the extremely challenging offshore environment and high operating costs, with a single deep-water well off the west coast now costing in the region of €70 million,” Mr Cahill said.
“Ireland is also perceived as an unrewarding and difficult place to do business due to the delays in bringing discoveries into production, concerns over the stability of the State’s licensing regime and the effectiveness of its regulatory framework for development projects.”
On the basis of geological studies, the Government believes there may be up to 10 billion barrels of oil buried beneath the sea bed off the Irish coast.
However, none of the energy industry’s big players entered the most recent competitions for licences to explore for oil and gas in Irish waters.
Mr Cahill warned that the Republic will not be able to develop its own oil and gas industry while exploration remains low and confidence in the State as a location for investment remains weak.
His association told the joint committee on communications, natural resources and agriculture that the State needs to put in place a regime that facilitates predictable oil and gas field development.
It also argued that it is imperative that the State begins to promote itself to the exploration industry.
It said that the State needs to assure the big players that they will be welcome here.
Trade union Siptu told the committee that its view was that consideration should be given to a change in the licensing terms, which might include the imposition of royalties, State equity stakes and increased taxes.
“We should examine alternative models for the development of oil and gas resources and the growing global trend towards increasing direct state involvement in the exploitation and production of hydrocarbons,” the union added.
