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Natural resources – they haven’t gone away you know

Friday, 07 October 2011

Liamy MacNally

The days are getting shorter and the lawyers are tripping over themselves in the noontime darkness.  Their cathedral minds are busy.  The Four Courts silver spoon still shines with looming cases.  The law does not always bring justice, even if the ladder of law has no top or no bottom!

A High Court judicial review of permissions granted for ongoing work on the Corrib Gas project is due to be heard on October 11.  The judicial review was sought by An Taisce and some local residents into permissions granted by An Bord Pleanála and the then acting Minister for Communications, Energy & Natural Resources, Pat Carey, for the pipeline and the Plan of Development.  The outcome could have serious implications for the Corrib project.

Another case in the High Court on November 3 could also have serious implications for Shell.  The trans-national company is included in defamation proceedings brought by a north Mayo company.  The company is also taking proceedings against two companies employed by Shell over loss of earnings and breach of contract.

More legalese: “Strong rumours here in Erris, Co Mayo (beside Corrib gas development) that the project will grind to a halt following an up-and-coming court case involving a local contractor, Shell and the local police force (Garda).”

The royaldutchshellplc.com website had this on its home page last Friday.  This website, subtitled, ‘News and information on Royal Dutch Shell Plc’ has nothing whatever to do with the said company.  A disclaimer states: “This is not a Shell website nor is it officially endorsed by or affiliated with Shell in any way.”  The site was founded by 94 year-old Alfred Donovan, the former Chairman of the Shell Corporate Conscience Pressure Group.  He is assisted by, among others, his son, John, who has been involved in the gasoline retailing industry for over 40 years.  John is best known for his long association with the Royal Dutch Shell Group, firstly for devising marketing campaigns on an international basis and more recently as a long-term Shell shareholder and critic of Shell senior management.  The site is a mine of information on Shell’s activities worldwide.

Less than a year ago, Éamon Gilmore promised an immediate review of oil and gas licensing terms if elected to Government.  Speaking in June 2011 Minister Pat Rabbitte stated: “To successfully attract a greater share of mobile international exploration investment to Ireland, we need a number of basic requirements.  Firstly, we must maintain a realistic tax regime that reflects our relative attractiveness as a place to invest in petroleum exploration.

Secondly, we need an approach to licensing that is designed to attract new companies to Ireland and to encourage those companies already here to increase their activity levels.  The 2011 Atlantic Margin Licensing Round, which closed yesterday, is an initiative designed to achieve this.  While it is very early days in terms of evaluating the applications received under the Round, I welcome the fact that a total of 15 applications have been received.

This is the largest number of applications ever received in a single licensing round in Ireland… The third and final requirement I would point to is a regulatory framework that is appropriate in terms of its transparency and effectiveness.”  Ouch!

For all their faults the Green Party Minister, Éamon Ryan, introduced changes to the licensing regime in 2007, stating: “The new licensing terms include a profit resource rent tax.  This new tax will be in addition to the 25% corporate tax rate currently employed.  It will operate on a graded basis of profitability… On our most profitable fields, therefore, the return to the State will increase from 25% to 40%.”  Put simply, the more profit a company makes the more tax it pays, (after all the tax write-offs.)

A Government publication last year claimed, “Ireland’s Atlantic basins hold the potential for major oil and gas discoveries in water depths ranging from 150 to over 2,500 metres.”  Using ten field development scenarios the report claimed, “the positive investment metrics included in the report are based on an engineering study and conservative economic assumptions.  As such they provide a thought-provoking insight into the attractive nature of oil and gas plays in the Irish Atlantic Basins.”  The ten field development scenarios would yield 6,375 bcf gas and 1,650 million barrels of oil.

The country is bust yet there is little recognition of its natural resources assets. Where are last year’s opposition voices?  Former politicians (none of whom is facing charges in court) reap huge pensions while cutbacks affect workers and non-workers.  More and more, life in Ireland is demanding a moral response from Government.  Maybe Government is really about the survival of the richest…

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