Vol. 514 No. 2
1 Mr. Finucane asked the Minister for the Marine and Natural Resources if his attention has been drawn to the widespread concern that the offshore activity off the west of Ireland may not generate the potential spin off jobs in view of the changed circumstances and the technological advances since the special tax regime was introduced in 1992; whether a review body will be set up in this regard; and if he will make a statement on the matter. [3576/00]
I am aware of recent statements to the effect that the added value to the economy of offshore developments may, in some way, be less than predicted. I wish to make a number of points. First, we are for the first time in the happy position of having a very real prospect of a significant gas find, possibly in the region of one trillion standard cubic feet, off the west coast. My priority is to assist the company, within my statutory responsibilities, in bringing this gas ashore and making it available to support development in the north-west.
Second, this favourable position follows almost 30 years of disappointment during which 133 exploration and appraisal wells were drilled in the Irish offshore at an estimated cost of about £700 million to exploration companies with only the Kinsale-Ballycotton and Helvick fields being declared commercial. Third, the reasons for the long period of disappointment is not that it has been contrived by the industry, as has been claimed, but is the result of external factors and, particularly, the stark fact that prospectivity in our offshore area remains low.
Fourth, our 1992 terms, which are currently the subject of some criticism, were carefully drawn up in order to maintain and enhance our position in the competition for exploration funds. They are not very different from those in place in the UK, which does not have a system of royalties, despite the fact that operating conditions off the west coast are worse than anywhere in Europe. Fifth, despite the terms, Ireland is likely to have only one Corrib related exploration well drilled in its offshore between 1998 and 2000 and prospects for the immediate future are not much better. The level of drilling since the 1992 terms were introduced shows little change over the previous period. Sixth, it is unlikely that we would have the very real prospect of a significant supply of gas, for the benefit of the people of the west and north-west, if we had not revised our terms in 1992.
Additional Information.
I am anxious that we do not lose sight of these facts. There will not be oil exploration and development without oil companies. Gas or oil will not be brought ashore unless Ireland can compete for exploration and production funds with the North Sea and other UK areas. We need to establish our offshore as a petroleum producing zone, not just one with a succession of dry and disappointing wells. The Corrib find holds out the promise of changing the perception of our offshore, perhaps stimulating further development. We must not do anything, now that we are seeing significant results, that might hinder that development. My objective is to balance the primary need to provide security, predictability as well as competitiveness so as to attract the oil companies, in the first place, with the real need to maximise the value to the Irish national and regional economies of prospective developments such as the Corrib.
None of this is to say that we should not continue to press the oil companies to employ Irish labour and contract Irish suppliers. However, the fact remains that the choice of Irish services will depend on the hard realities of the market and that the scope for me or my Department to force the companies to employ Irish goods, services or employees is minimal. I intend to intensify the effort to bring potential operators and Irish suppliers together to ensure that complete and timely information on potential business is available, that a level playing pitch exists and is maintained and that Irish companies are technologically positioned to avail of all opportunities. I am organising a business awareness seminar as part of this intensified effort to maximise the use of Irish goods, services and employment. The principal companies currently operating in our offshore area have agreed to participate in this seminar and in the intensified effort I am initiating.
I assure the House that I will review the 1992 terms when, and if, I consider it necessary, having regard to the overall need not to jeopardise the interest or involvement of oil companies in our offshore areas. I have asked my Department to provide me with a preliminary assessment of developments since 1992, including any change in prospectivity, which might warrant such a review. In the light of this assessment, I will make a decision on whether a formal review is in the best interests of all stakeholders in the State.
I wish the Minister well with his new portfolio. I am aware that a great deal of media attention has been focused on the west in regard to this issue. As the Minister rightly pointed out, the gas find is estimated at one trillion standard cubic feet. Is he aware that the Wood McKenzie report quantified the potential find at more than five trillion standard cubic feet and, therefore, it has tremendous potential? Is he further aware of the concerns which have been expressed about the use of Irish goods and services by exploration companies? The Minister's predecessor articulated these concerns to Enterprise Oil at a function on 14 October 1999. Will the Minister follow his example to ensure that such services are used by exploration companies?
Is he further aware that Enterprise Oil is servicing its rigs primarily from Ayr, Scotland, which is extremely disappointing? Should the company do more service contracting in Ireland? It has a token presence in Killybegs, but there is concern that the dividends from offshore gas exploration may go to Scotland and Ireland. The services and infrastructure are available here. Deputy Fahey stated that he is Minister for the west and it is incumbent on him to ensure that Ireland benefits from such exploration. Is the Government concerned enough to ensure that this happens?
My priority is to ensure that the maximum benefit from offshore oil and gas exploration accrues to Ireland, particularly the west. However, we must be realistic. The company currently operating in the Corrib field makes decisions which are based on what is most viable and strategic for its development. I am most keen to try to attract more offshore service work into Ireland and I will make every effort to do so. I have already met representatives of the company involved and put forward my views in that respect, but I must acknowledge their case for the most commercially viable way to do their servicing, which is from Scotland at present.
I assure the Deputy that I will leave no stone unturned in putting forward the case for increased activity off the west coast. Quite an amount of activity is taking place at Killybegs and we encourage that, but I will take every opportunity to ensure that as much servicing and support work as possible is carried out off the coast. My objective is to transfer as much of the work as possible from Ayr to Ireland. However, there are good practical and commercial reasons for the company to operate from there.
