Dáil Éireann debate -
Thursday, 10 Apr 1997

Vol. 477 No. 4

Adjournment Debate. - Oil Operations.

Mr. S. Brennan

I thank the Minister for taking this matter. There has been news in recent weeks of drilling activity commencing again off the west coast — three oil companies have moved into the area with their operations — and such news is welcome. There is however growing concern that Ireland will not benefit significantly from this activity. My primary concern is that the maximum benefit should accrue to the economy, particularly in terms of employment.

Since the late 1960s there has been a substantial input from Irish based oil rig workers on the oil rigs drilling in Irish waters. Many of these workers had worked abroad and returned home with skills vital to developing the native Irish oil industry. The initial quantities of oil did not fully materialise, however, and natural gas off the south coast was the only natural hydrocarbon resource to be fully exploited, providing a limited number of well paid sustainable jobs. Those jobs and conditions were achieved with Marathon. While drilling was at its peak during the 1970s and 1980s many new people were introduced to the industry in Ireland, with the impetus coming from the then ITGWU. The standard was such that between 54 and 78 jobs on each rig in Irish waters were held by workers from Ireland. Employment procedures and pay rates were established at the oil rig servicing ports.

SIPTU has expressed extreme concern that Irish workers will not get fair treatment in terms of job opportunities in the latest oil operations off the west coast. They say there are 900 experienced Irish based oil rig workers and they fear the Minister will allow the international oil companies coming into Irish waters to by-pass them. They have described the advertisements which have appeared in Irish newspapers seeking oil workers as "window dressing" to get the Minister for Transport, Energy and Communications off the hook. They accuse the Minister of being "hoodwinked" by the oil companies and of allowing them to depart from every established practice for pay, conditions and employment in the oil industry here.

The Department of Transport, Energy and Communications is in a very strong position in this matter in that it awards the licences and it requires the oil rig emergency response vessel to be able to reach the site of an oil spillage in half the time it takes oil to reach land. Clearly vessels cannot be based in Scotland, as has been suggested by the oil companies, if there is drilling off the west coast of Ireland. The Minister is in a position to ensure maximum benefit for the economy.

Ireland operates a generous regime for search and discovery of oil and gas. Of 110 countries surveyed by an international group, Ireland offered the lowest corporation tax and royalty rates in the world, with all drilling, labour, research, production, goods and construction costs deductible against tax. While oil companies need to be attracted to drill in Irish waters with competitive tax benefits, some commitment to the Irish economy in terms of jobs, services and related spin-offs needs to be ensured. I call on the Minister to attend more carefully to this duty and to show some speed in the matter. I also call on him to maintain better links with advisers on the oil industry who will be able to guide him to the best course in this area.

Minister of State at the Department of Transport, Energy and Communications (Mr. Stagg)

I thank Deputy Brennan for raising this issue which is one of the success stories of the Government. The primary objective of my Department in regard to offshore oil and gas exploration is to secure the discovery and economic development of indigenous petroleum resources by maintaining a favourable environment for exploration and production by private enterprise on a basis that will yield optimum benefit for the State.

In pursuing these objectives the Department's strategy involves maintaining clear licensing terms which balance the interest of the State and optimal exploration and development activity. This is pursued by providing effective promotion and appropriate licensing opportunities for exploration and production companies. The current licensing terms have been very favourably received by the petroleum exploration and production industry. The success of policy in this area can be measured by the quality and geographic spread of petroleum exploration in Ireland and by the number of companies operating in the exploration and development sectors.

Thirteen frontier licences and one deepwater licence have been issued for areas off the west coast. In addition, applications are currently being processed from 17 exploration companies for acreage off the west coast in the Rockall Trough under the Rockall Trough Frontier Licensing Round. This is the most successful round to date in the history of our exploration efforts.

Exploration activities have resulted in significant benefits for Irish firms in various service areas such as catering and supplies, air transport and communications. Some of the requirements for drilling operations are of a specific and specialised nature and Irish firms are not currently in a position to exploit these opportunities, but I hope that, in time, they will be able to do so.

The Deputy will be aware that EU legislation on the free movement of labour within member states precludes me from imposing minimum levels of employment of Irish workers on licence holders for particular operations. However, while I have no direct role in relation to manning levels on drilling rigs it is my policy to try to ensure that the Irish economy benefits to the maximum extent possible from hydrocarbon exploration activities in the Irish offshore. I have continually impressed on operators that Irish workers and suppliers of goods and services must be given equal opportunities to participate in such activities. The Irish Offshore Operators Association has had discussions among its own members and with SIPTU on the issue of labour on drilling rigs with the intention of arriving at an acceptable solution through consultation with all parties concerned. I understand Statoil has reached a new agreement with SIPTU for the employment of up to 34 workers on the Connemara drilling operation. Significant numbers will also be employed in the service vessels and auxiliary activities associated with the drilling operation.

I have made my colleague, the Minister for Enterprise and Employment, aware of the increased opportunities arising from offshore activities as I believe his Department also has an important role to play in this area. It is important that we identify areas in which Irish goods and services and Irish industry can enhance its current level of involvement. Forbairt, which is under the aegis of that Department, plays a very active role in promoting the use of Irish goods and services and has compiled a register of services available in Ireland to support exploration and production operations. That agency liaises with exploration companies at a very early stage and is in a position to act as a catalyst in establishing linkages between service companies and exploration companies. I compliment Forbairt on the magnificent job it has done in this area.

This is set to be a significant year for offshore oil development in Ireland. Statoil has plans to proceed with appraisal of the Connemara oil field and is currently in place. I am optimistic this will result in the first commercial oil find off Ireland. Marathon and Total also have firm plans to drill in the Porcupine Basin and Enterprise proposes drilling in the Kish Bank Basin. I am confident the economy will benefit to a significant degree from these operations this year.

In recent times the union spokesperson has been enthusiastic about the programme and demonstrated that 200 jobs will be created as a result of agreements between SIPTU and Statoil. Other rigs are also likely to benefit. The Deputy may not have been aware of that positive move. I agree with the Deputy that this operation must add value to the Irish economy. We have tooled up the Whiddy Island tankage farm, which is ready to receive the largest tankers in the world for the storage of crude. We have also upgraded the Whitegate refinery to refine the oil when it is found. I am confident oil will be brought ashore this year in commercial quantities.

The Dáil adjourned at 5.15 p.m. until 2.30 p.m. on Tuesday, 15 April 1997.