For them the word "development" means easy pickings for those bestowed with the benefit of Fianna Fáil's pleasure rather than a balanced regime of royalties, taxes and State participation that would allow genuine development to be for the benefit of the people as a whole. We have some live examples of historical mementoes in this House.
In Opposition, on the other hand, Fianna Fáil speak with divers tongues on these issues. Balanced adjustments that are necessary, for example in oil exploration terms are stated to be "too little and too late" by the spokesman on energy while on the other hand Deputy Haughey warns me, as he did last July, against doing anything at all lest my actions might benefit anyone whom he thinks is not in his favour.
I want to refer now to recent developments in oil markets generally, and to the situation relating to offshore exploration. The most significant feature of course has been the dramatic slump in the price of oil. The effects of this on our economy have been complex. It has contributed to the rapid falling off in inflation, and has lowered the prices of many goods in the shops. Motorists have seen significant reductions at the petrol pumps, despite some fluctuations, and industrial and commercial users of energy, including electricity, have derived substantial benefit. Overall, the benefits to our economy, particularly our balance of payments, have been very substantial. However, there has been another side to the fall in oil prices. It has led to enormous cutbacks in exploration expenditure worldwide and created difficulties for Ireland's exploration programme. However Ireland's good exploration record has been maintained, and so far this year seven exploration wells have been completed. On present indications it is likely that at least one further well will be spudded before the year end. While this year's wells did not result in new discoveries, the results continued to give encouragement, added to our knowledge of our offshore basins and most important of all, ensured that the impetus of our exploration programme was not diminished in this, a most difficult year. I am hopeful that this impetus can be maintained in 1987 and later years. We should remember that to date 95 wells have been drilled offshore, involving oil company expenditure of more than £1 billion with the resultant spin off benefits to the Irish offshore services industry.
It was with a view to maintaining the thrust of our exploration effort that I recently introduced significant new incentives for oil exploration and development off our shores.
Our offshore licensing terms must be sufficiently attractive to invite exploration and development but sufficiently firm to protect fully the interests of the Irish people, who after all are the owners of our national resources. The terms also have to be competitive with those of other nations, especially in these days of shrinking exploration budgets. Essentially they must reflect the realities of the day. In 1975, when our licensing terms were published, and in subsequent years, there was an expectation of rising prices in nominal and even in real terms. The provisions laid down then require adaptation to meet today's market conditions.
In 1985, I introduced a clarification of the terms to meet a particular concern of the oil companies at that time. This defined a marginal field and set the limits for carried State participation in such a field. Since then the price of crude oil has fallen by about 50 per cent and exploration work in the main Irish area of interest, the Celtic Sea, has provided evidence that the area is geologically complex and that accumulations will be small rather than large. In this new situation, it was reasonable to expect that the State's position regarding royalties and participation would be made known before the oil companies entered new drilling commitments, as they were incurring all the costs and undertaking all the risks.
The new arrangements for royalty relief and State participation which I announced on 19 September last are geared to take account of the price of oil and the amounts and rates of profit which are actually earned in a development project. They were formed so as to afford future relief, in accordance with exploration effort, from scheduled royalty payments; to specify the levels and rates of profit which must be secured before liability would arise for participation payments; but at the same time to ensure always some revenues to the State by way of a minimum 3 per cent royalty in all development projects. This will remove uncertainty that companies might have about their treatment by the State in the event of a future development.
I believe that the 1986 adjustments to the terms have struck the right balance between the concerns of the oil companies and the interests of the State. The steps taken have been positive and as I had anticipated, the general reaction of the oil industry has also been positive. Again these initiatives show quite clearly that this Government have the confidence to guide the country through very difficult times and will not shrink from taking innovative and radical decisions in order to secure the long term future of important sectors of the economy.
I wish now to refer to issues related to the use of nuclear power. The Government are totally opposed to the discharge of radioactive waste into the Irish Sea. This position is well known and every opportunity has been taken to express this view at international level. The Government have called for discharges of radioactive waste from Sellafield to be minimised and to be eliminated as soon as possible through the use of the best available technology. The Government are also concerned at incidents at Sellafield which, although of negligible radiological significance, have caused a loss of confidence in the safety of the operation of the plant. This concern was conveyed to the British authorities on many occasions.
The question of closing Sellafield is more complex than it may appear. There are a number of problems relating to the decommissioning of nuclear installations which have yet to be resolved. For example, there is a large amount of radioactive fuel already stored at the plant which would continue to require attention and management even if reprocessing activity were to cease. The Government give priority to ensuring the safe operation of all nuclear plants, not just Sellafield.
In this respect, under the auspices of the International Atomic Energy Agency the Government recently signed conventions on early notification and on mutual assistance in the event of a nuclear accident.
The Irish people are being exposed to a potential nuclear hazard from operations outside Irish jurisdiction. This makes the problem an international one. The view of the Government is that this issue must be resolved by the European Commission under the provision of Euratom. This is why the Government are pressing for the establishment of a European inspection force. This would determine independently whether, in addition to other nuclear installations, Sellafield can operate safely or whether its operation should be suspended or cease until it could be rendered safe.
The recent accident at the Chernobyl plant in the USSR brought to the entire world the consequences which can result from an accident at a nuclear establishment. The accident resulted in widespread radioactive fallout and subsequent contamination in almost all European countries. We in Ireland fortunately escaped the worst effects of the accident, and levels of radioactivity here are not significant. However, the accident emphasised that national boundaries are not a protection against nuclear risks. It reinforced the Government's conviction that a European inspection force is an essential element of nuclear safety and must be established so as to ensure that the nuclear industry adheres to the most rigorous safety standards. The Government will continue to press at Community level for the introduction of such a force.
Increased resources have been made available to the Nuclear Energy Board. Following the Chernobyl accident demands on the board's monitoring facilities increased dramatically. In May 1986, £383,000 was approved for office and laboratory facilities. In addition, the Government approved a sum of £60,000 for equipment, and provision was also made for five extra staff. The board carried out their monitoring programme in the interests of public health and safety, and certification of exports by the board was of particular help to the agricultural industry. As monitoring demands continued to increase in the wake of Chernobyl, the Nuclear Energy Board sought and were granted an additional £167,000 for further monitoring equipment and four extra staff. The resource requirements will be kept under continuous review.
I set up an interdepartmental committee to deal with emergency planning issues. A sub-committee consisting of the Departments of Energy, Health, Defence, including Civil Defence, the Meteorological Service and the Nuclear Energy Board will soon complete consideration of an emergency plan which will then be submitted to me.
I want now to refer to the significant progress that has been made in extending the natural gas grid throughout the country. In October 1985 I gave approval to BGE to proceed with the construction of a natural gas pipeline to Limerick. Construction is now almost complete and is on time and within budget so far. It is intended to have natural gas flowing in Limerick city by spring 1987 with the system to be operated by a new company jointly owned by BGE and Limerick Corporation. En route the dairy co-operatives at Mitchelstown, the Golden Vale Co-operative in Rath Luirc and the Ballyclough Co-operative in Mallow are being supplied.
The approved estimated cost for the entire Limerick project is £15.5 million. Up to 500 people have been employed during the construction phase.
In July 1986, approval was given to provide a supply of natural gas to Clonmel. Construction is due to commence in January 1987 and is expected to be completed in April 1987. The system will be owned 80 per cent by BGE and 20 per cent by Clonmel Corporation.
In June 1986, the Government gave approval for construction of a pipeline to supply Kilkenny with natural gas. The contract was allocated on 15 October 1986 and construction work has now commenced. BGE will control the distribution of gas in the city.
I also gave approval to Bord Gáis in October 1985 to proceed with the construction of a natural gas pipeline to serve Waterford. BGE commenced construction of the new 48 km spurline in June 1986 and work on the mainline to Waterford city is expected to be completed by the end of October. Contracts for the supply of gas have been agreed by BGE with a number of major industrial companies in the county. Overall, some 300 workers on average have been employed on the project during the construction period. The total cost of the project is estimated at £8.8 million, over 70 per cent of which will be spent on Irish goods and services.
Overall, sales of gas to local utilities and industries have increased and now represent 21 per cent in value of total sales.
Considerable progress has been made in laying the basis for an efficient and viable natural gas distribution operation in Dublin. The receiver has assessed the overall situation in the Dublin Gas Company since his appointment last April, and a major rationalisation of the company is in the course of completion. With the finishing of the conversion programme during the summer, Dublin city now has a modern gas distribution network. I am considering the future funding requirements of the operation and my intention is to ensure a well run and publicly owned gas utility for the people of Dublin.
In the course of his contribution Deputy Reynolds asked a number of questions which deserve a reply. He asked, in relation to the information supplied in the last number of days, why it took so much time to collect. I should like to tell him, and the House, that information had to be assembled from files, from the receiver and the Dublin Gas Company to answer the general questions raised.
The Deputy also asked questions about Mr. X's pension arrangements and I should like to tell him that the pension arrangements were between that individual and the company. They were initiated contractually in 1977 when Deputy Reynolds, and the Fianna Fáil Party, were in power.