‘A rape of our natural resources’

[ This article was first published in Village Magazine on Friday, July 1st, 2005. It appeared beside this article: Sitting on a time-bomb ]

By William Hederman

In the long-running dispute over Shell’s high-pressure gas pipeline in North Mayo, which has resulted in five local men being jailed by the High Court at the request of the multinational, the objections of those living close to the pipeline tend to be juxtaposed against the “national interest” and Mayo’s “regional development”. But just what will the benefits to Ireland be?

Maureen McGrath and Willie Corduff pictured in June 2005, weeks before his imprisonment. Copyright: William Hederman

According to economist Colm Rapple, there is “no benefit to Ireland” in the current Corrib gas field operation. “The oil will flow out of Mayo and Shell won’t pay anything for a very long time. And we’ll pay the same price as if we were buying the gas from Russia.” Rapple describes the terms granted to Enterprise Oil (subsequently bought by Shell) in 1992 for the excavation of the Corrib gas field as “a rape of our natural resources”.

Under these terms, Shell will own 100 per cent of the gas it extracts; no royalties need be paid to the State; the company will eventually have to pay 25% tax on the profits of the operation, but all costs that Shell claim are related to the project – even those incurred outside Ireland – can be written off against this tax. This situation arises thanks to then Energy Minister Ray Burke’s mysterious decision to change the relevant legislation in the 1990s, abandoning both royalties and the State’s claim to a 50 per cent shareholding.

Mark Garavan, a sociology lecturer at GMIT in Galway, describes the terms as “economic pillaging on a huge scale. There are no financial gains for Ireland.” The deal the oil companies are getting is, “in fiscal terms, comparable to the nursing homes scandal. But it’s a political act, it wasn’t civil servants, so the politicians are keeping quiet about it.”

“It shows the power of global corporations to dictate government policy… Shell is using practices they’d have used in Nigeria, in this, a developed country.”

When Shell sells the gas to Bord Gais, it will not be obliged to do so “at anything less than market value”, says Rapple. “It’s our gas, but we’re paying the market price for it. We may eventually get something by way of taxes, but no taxable profits will be declared in the first few years. Shell can write off all costs related to the exploration, even those incurred in other countries. They will even be able to include the cost of closing the operation.

“Oil companies have chipped away at Irish legislation, with the result that a succession of governments have given away the family silver to oil multinationals,” says former oil rig worker Padhraig Campbell.

Thousands march in Dublin, Summer 2005, calling for release of Rossport Five. Copyright: William Hederman

“Another massive flaw” in the current terms for gas exploration, according to Campbell, who is chairman of the Campaign for the Protection of Resources, is “the lack of any stipulation that spin-offs from exploration and production should benefit Ireland. The result is that the Scottish economy now benefits from Irish tax breaks” – a reference to Shell’s reported sourcing from Scotland of many of its supplies for the Corrib field exploration.

Campbell, who spent 12 years working on oil rigs and pipelines around Europe and is also a spokesman for SIPTU’s National Offshore Committee, says: “the Irish people are being ripped off for the sake of a handful of jobs in Erris.”

The benefits to Erris (the region in which Rossport is situated) have also been called into question.

Mark Garavan says: “when gas was first raised off Mayo, it looked like a catalyst for huge regional development. But now there is silence. Nobody is arguing that it’s bringing development to the area, not even proponents of the scheme.”

None of the gas will be available to the local area, nor to any part of Mayo. The county is not on the Bord Gais national grid and future supply to Mayo will only come about if demand is great enough, according to Bord Gais. As far as jobs go, Derek Reilly, president of the Erris Chamber of Commerce, which has been “behind the project from day one”, told Village that local jobs were the main factor. When pressed on this, he mentioned “30” as the likely number of long-term jobs (about 500 would be involved in the construction work). He also said some local infrastructure was being improved.

A striking aspect of this affair is that while the five men jailed for obstructing Shell have been ordered to pay Shell’s legal costs for the hearing at which they were jailed, Shell can eventually write off all their own legal costs against whatever profits they eventually declare on the Corrib project.

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