The Irish oil situation


What’s going on with Ireland’s natural resources? Many people believe that our government have given our oil away, and that ownership and control of the oil belongs completely to the various oil companies. Have our government really given it away? There’s so much speculation and spin around the whole topic – no one seems to be able to give a clear assessment of the situation. When confronted, politicians do what they do best – avoid answering questions. Isn’t it time we had some transparency?

On a recent trip to Oslo, I spoke with an engineer who worked on the first oil finds in Norway. Before Norway began producing their own oil, it was a poor country which mainly produced timber and fish. The illusion that the Norwegians initially knew how to produce oil needs to be smashed. There is a distinction between a drilling/exploration licence and a licence to extract/produce. When Royal Dutch Shell declared itself capable of producing oil in the North Sea, the Norwegian government said “great, now it’s a joint venture”. Essentially, they said “this is Norwegian oil and if you’re going to take it out of our territory – it is going to be a joint venture – we’re in.”

Norway didn’t become a wealthy country overnight. When the oil industry was in its infancy in Norwegian waters back in the 1970s, the Norwegians paid dearly; people don’t work for free. For example, each barrel worth $109, Shell say “we want $87 of that because we need to recover our huge investment.” This is where government need to be strong in their negotiations and get the best deal for the state. The Norwegians learned quickly and invested heavily in education and over time have become leading experts in oil exploration and production. Where did they attain this knowledge?

In the 1970s, engineering professionals from the Gulf of Mexico (the birthplace of off-shore drilling) and Britain came to Norway with their expertise. It wasn’t long before Shell and other companies were in the North Sea. The Norwegians participated; they watched and learned the techniques of the industry and since the 1980s have been exploring and producing around the globe with their own company, Statoil. Their main political objective has been to ensure that the values on the Norwegian Continental Shelf (NCS) benefit the entire country.

It appears that a country would be better off to put out contracts to drill and extract the oil out to tender; however, the industry is not structured this way. Off-shore oil production by its nature is very costly because the crude oil extracted has to be refined. To save on transportation costs, the oil company builds a platform to refine the oil at sea. It takes three years and costs billions to complete this project. Once the oil is refined, it can then be piped to the mainland or more favourably into huge tankers, which can then be shipped across the globe to the highest bidder.

Who makes the lion’s share of the profits? Of course, the company who makes the biggest investment into the research, scientific work, development, drilling, production, and when they get the oil up and out of the sea bed, the share that the country gets depends on the contract made between the oil companies and the government of the country. Shell is a company who often invests 100% of the costs of exploration and then leases out drilling rights to companies who come in and produce. Shell and the government negotiate the terms. The Irish government appear to be gravely inept at bargaining with multinationals. One only has to look at the IFSC and the minuscule rate of tax they pay the state. Why don’t we demand more?

If we want to emulate the Norwegians success, we must be willing to invest wisely in ascertaining the necessary knowledge and educating professionals in the field thus creating our own company, which we could appropriately name, Emerald Oil. However, this will be impossible for us to do because we are paying billions of euros to unsecured bondholders in Europe, and to our International bailout masters.

The International Monetary Fund (IMF) has given us a bailout package along with European financial institutions. The IMF has a reputation for being repaid through the sale of a country’s natural resources; asset stripping is their forte. Their ability to manufacture and offload massive debt onto countries, and then take control of their state assets has been fine-tuned over the last 50 years, from Latin America to Africa to Asia. Our energy reserves alone are worth potentially trillions and anything else is a bonus for them. They succeed via complicit government and elite that is thrown a few bones to keep them accustomed to the life they live. What they don’t like is a well-informed, educated public, capable of engaging in critical thinking. Let us be critical, vocal, resolute and disobedient, and demand more.

One hates to be pessimistic, but it looks like we’ve been set up and are about to be completely robbed of our natural assets. Wouldn’t we be better off to leave our oil in the ground until we’re ready to profit from it? The IMF and co are expecting to be repaid with the sale of Ireland’s forests, cheap oil, and cash payments in the form of further cuts in public spending. Austerity doesn’t work; it has never worked anywhere, ever. We should have already repudiated this toxic debt, which is not ours, and left the euro. Only then can we create better opportunities for future generations on this abused island. Support the campaign to Own Our Oil http://www.ownouroil.ie.

via The Irish oil situation | Irish Student Left Online.

via The Irish oil situation | Irish Student Left Online.

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About Old Boy

Love the past and the future but live in the present

Posted on May 19, 2013, in buisiness, Energy, gas, Government, Ireland, National Politics, oil, politics and tagged , , , , , , , , . Bookmark the permalink. Leave a comment.

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