Providence boss repeats usual myths about Irish oil/gas fields
By William Hederman
This morning (Wednesday, 10th October 2012) the CEO of Providence Resources, Tony O’Reilly Jnr, was interviewed live on BBC Radio 4’s flagship current affairs programme, ‘Today’, following the company’s announcement that its Barryroe field off Cork will yield 280 million barrels of oil. The presenter quizzed O’Reilly about the bad deal Ireland will get from production of Irish oil. [See link at end of this article to an audio file of the BBC interview]
He asked O’Reilly how much of the revenue from Barryroe the Irish State was likely to receive, considering the very low tax rate here for oil and gas production. The presenter also asked the Providence boss about the extraordinary fact that, for the purposes of this tax, Providence would be able to deduct 100% of its exploration costs anywhere in Irish waters going back 25 years.
O’Reilly’s response was to trot out the same myths and obfuscation that have been the staple of the Irish oil lobby’s and the Irish government’s defence of Ireland’s dysfunctional licensing regime.
On the tax write-off of exploration costs going back a quarter of a century (remember, that’s exploration anywhere in Irish territory, even if it isn’t related to the field in question), O’Reilly blustered that this was “pretty normal everywhere in the world”. It isn’t normal worldwide.
He then reverted to the usual script, pointing out that Ireland has no oil industry and that Barryroe heralds “the beginning of that industry”; he cited “security of supply” and “jobs” and all-round “enormous benefits”. This is supposed to be the consolation for Ireland’s low tax ‘take’.
These claims serve to perpetuate the misinformed debate around this issue. As demonstrated previously on this website, Ireland does not require that oil or gas extracted from Irish waters be landed in Ireland or supplied to the Irish market, nor that the companies use Irish equipment, services or personnel. O’Reilly’s company has admitted that any oil find at its Dalkey Prospect is unlikely to result in any economic benefits locally.
The company is refusing to confirm where the oil from Barryroe will go, even though it already knows exactly what kind of oil it is and thus it knows whether the Whitegate refinery at nearby Cork can process the oil. This caginess must lead one to suspect that it is considering exporting the oil from the rig to a refinery overseas. Regardless of where the oil from Barryroe ends up, the company is not likely to create jobs or economic spin-offs in Ireland.
In other words, when O’Reilly says Barryroe will be the start of an industry, what he should have said is that it will probably contribute to the oil industry in Scotland, the Netherlands and other places where oil companies source their staff, equipment and support services. Our security of supply will only be improved if Providence decides to bring the oil ashore here. If it ships the oil abroad, our security of supply will be weakened.
When the BBC presenter asked about the Dalkey oil project (Providence last week got a licence to drill next to Dalkey Island), O’Reilly said: “Hopefully benefits will accrue in the locality.” This contradicts his own employees, who have previously made clear that there are unlikely to be any benefits locally.
Some will argue that a low tax take is better than no tax take, so we should just let the companies get on with finding and extracting our resources. This short-term approach ignores the many costs associated with extraction of our oil and gas.
As well as the obvious environmental risks associated with extraction, there are the social costs, as witnessed by those resisting Shell in north Mayo. There is also an economic cost: extraction means the depletion of resources that would be vital in decades to come, when security of supply is a real issue.
Finally, the presenter asked O’Reilly a question rarely heard on Irish airwaves: “Will you be landing the oil in Cork?” O’Reilly’s answer was: “We hope so.”
This encapsulates the Irish Government’s policy: hope. The best we can do is hope that companies supply us with our own oil and gas and to hope that they generate some kind of economic spin-offs in Ireland, while we simultaneously hope that they don’t destroy the environment.
Audio of this morning’s interview on BBC Radio 4’s ‘Today’: