Martin Ferris
Question:69 Mr. Ferris asked the Minister for Communications, Marine and Natural Resources his views on the benefits which will accrue to the economy from the reported oil find at Dooish well. [22141/02]
Priority Questions. - Offshore Exploration.
It is too early to speculate on possible benefits to the economy. A considerable amount of analysis of existing data together with much further appraisal work on the prospect will be required. It is expected that appraisal operations will resume at the earliest possible opportunity during the drilling season in 2003. Even at that stage it is unlikely there will be enough known to judge the economic significance of the find given the depth of water – 1,500 metres – the distance from shore and the lack of infrastructure in the area. There was a period of four and a half years between the initial find on the Corrib gas field and the declaration that it was commercial.
The licensing terms for oil and gas exploration and development cover in a comprehensive way the terms and conditions governing all aspects of exploration and development including the general terms relating to frontier exploration licences. The Dooish well, if it is commercial, will be developed under the 1992 terms.
The use of Irish goods, services and employees is a crucial means by which exploitation of our hydrocarbons adds value to the economy. However, the Government does not expect exploration companies to avail of Irish goods, services or employment where these are clearly uncompetitive. It does, however, expect that any company operating in Ireland for the long-term will see that it is in its own best commercial interest to build strong links into the Irish economy and to demonstrate a significant economic and social dividend. In that context I have arranged to meet with SIPTU on the general question of ensuring that companies operating in the Irish offshore, whether exploring or producing, use competitive Irish services to the greatest extent possible.
Does the Minister agree that he has been constantly misled by the exploration companies on the extent and timing of finds? Does he further agree that the current licensing terms afford no benefit to this State as it has no stake in any find and earns no royalties and, in turn, grants massive tax write-offs? Will the Minister take steps to change those terms?
Furthermore, does the Minister believe that the role of the former Minister, Ray Burke, in granting those terms warrants a full investigation? Will he establish the State petroleum corporation as an active agent in the exploration of our oil and gas reserves and will he put pressure on the oil companies to employ Irish workers? At the moment, to work offshore, an Irish rig worker has to go abroad and come in with a rig, and the reason for this is the deunionising of the oil rigs. Is the Minister prepared to insist on the oil companies employing Irish workers and using services from this State? Finally, will the Minister state whether the 1975 or 1992 terms apply to the Ramco find in the Seven Heads field?
I do not accept that we have been misled by the oil companies. We have efficient officials in the Department who are on top of their brief. In respect of some of the issues raised by the Deputy, it is the policy of this Govern ment, as it was of previous Governments, that companies operating in the Irish offshore should use Irish goods and services to the greatest extent possible. I recently made that point at the petroleum dinner I addressed.
A framework group representative of my Department, the State's development agencies, the Irish Offshore Operators' Association and the Irish offshore service industry, as well as the unions, has the task of ensuring that Irish companies are made aware of, and given the opportunity and assistance to bid for, upcoming work in the Irish offshore. It is very involved in this area. In the event of the Dooish discovery becoming a commercial project, it will be involved in selling Irish goods and services and promoting the employment of Irish employees, of which the Deputy spoke.
As I said in my initial statement, I have arranged to meet Noel Dowling, the national secretary of SIPTU, on 3 December to discuss in general how to ensure that Ireland benefits to the greatest extent possible from offshore hydrocarbon exploration and production.
The changes made in 1987 to the offshore exploration licence terms were designed to keep exploration in Ireland at a sustainable level. The changes addressed the falling levels of both exploration and commercial finds and sought to make exploration in Ireland attractive for the industry when several other countries of north-west Europe were enjoying commercial finds. In fact, these adjustments were consolidated in the 1992 licensing terms and have been left unchanged by every Government since then. Despite the relative attractiveness of these terms, no company has benefited from them to date. Therefore, there has not been a big influx of companies because of the change in the licensing regulations.
What about the tax write-offs?
We must proceed to Question No. 70.