Pat Rabbitte
Question:10 Mr. Rabbitte asked the Minister for Energy the total amount paid by Marathon to the Exchequer in respect of royalties for the Kinsale gas field; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Kinsale Gas Royalties.
The total amount paid in royalties by Marathon in respect of the operation of the Kinsale Head gas field since 1982 is IR£38.8 million.
Is the Minister satisfied with the level of royalties being paid? Has a date been set for a review of the royalties paid? Will the royalties in respect of the new discovery of gas by Marathon in Ballycotton be paid at the same rate or can the Minister impose a different system of royalties for that?
As regards the finds in blocks for which Marathon have a licence at present, the terms that will apply will be along the lines of those agreed previously. The Deputy asked if I was satisfied with the level of royalty payments. The direct financial benefit to the State in the form of royalties represents only one of the positive benefits which this country has derived from Kinsale natural gas.
Out of the revenue earned by BGÉ from the sale of gas they have returned dividends to the State totalling £260 million to date, they have been able to build up an extensive gas grid and they have achieved a turnaround in the fortunes of Dublin Gas. In addition, our balance of payments has benefited because of the substitution of natural gas for imported fuels — the value of replaced imports is about £2 billion.
Reliance on imported oil has been substantially reduced from almost 75 per cent of energy requirements in 1979 to less than 50 per cent now. Homes and industries have been afforded a reliable, efficient, clean and competitive energy option. Other environmentally damaging energy forms have been displaced. The rate at which royalties are paid by Marathon is determined by longstanding contractual agreements with the company. In my view the applicable ratio of royalties is fair and reasonable having regard to the necessary investment incurred in developing the Kinsale field and in production, processing and transport of the gas and also to the wider economic and social benefits that Kinsale Gas have bestowed.
I know this point is not included in my question, but it may be in the Minister's brief. What royalties were paid in 1990?
For 1990 royalties paid amounted to £4.4 million and for the first six months of 1991 they amounted to £2.7 million. In 1987 only £1.1 million was received in royalties.