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Royal Dutch Shell has won exploration licence off Irish coast

Financial Times: Royal Dutch Shell has won exploration licence off Irish coast

“Royal Dutch Shell, the Anglo-Dutch energy group, has been awarded a licence to explore for oil and gas off the west coast of Ireland, where it is engaged in a legal dispute with residents about a proposed gas refinery and pipeline.”: “Separately, Shell confirmed it was considering a bid for several Arctic oil and gas fields in Russia as part of its efforts to expand its depleted reserves.”

By John Murray Brown in Dublin and Thomas Catan in London

Published: August 18 2005

Royal Dutch Shell, the Anglo-Dutch energy group, has been awarded a licence to explore for oil and gas off the west coast of Ireland, where it is engaged in a legal dispute with residents about a proposed gas refinery and pipeline.

Shell submitted an application in partnership with Eni of Italy and OMV of Austria for four blocks in a deepwater area known as the Irish Rockall Trough, 150 miles off the Donegal coast. The company now has five licences for offshore exploration in the waters off Ireland. Island Oil and Gas, an Irish company listed in London, was also awarded a licence.

The award to Shell was immediately attacked by local campaigners, who are fighting Shell’s plans for the onshore refinery and pipeline in north Mayo.

The €900m (£612m) project will treat the gas from Shell’s Corrib field, which it is developing with Statoil, the Norwegian state-owned company, and Marathon of the US. Corrib, Ireland’s only find in the past 20 years, was discovered by Enterprise Energy, which Shell bought in 2002, and is strategically vital to Shell’s long-term energy plans.

Five residents of Rossport were imprisoned in June for contempt of court after trying to stop Shell starting construction of the pipeline, which would go through their village. Work on the project is suspended at present.

Irish exploration terms are some of the most attractive in the world, reflecting the lack of success companies have had.

According to figures from the ministry of natural resources, 121 wells have been drilled in Irish waters in the past 20 years compared with 7,000 in the UK section of the North Sea.

The Irish government has been attacked by environmental campaigners for giving away the country’s natural resources too cheaply.

Oil and gas companies are entitled to recover their exploration and production costs in full before paying tax, after which profits are taxed at 25 per cent. In the North Sea, the tax rate is 40 per cent.

The awards to Shell and Island comprise just 10 per cent of the acreage under offer, another illustration of the difficulties the Irish government is having attracting international companies to invest in the sector.

Separately, Shell confirmed it was considering a bid for several Arctic oil and gas fields in Russia as part of its efforts to expand its depleted reserves.

“A Shell team has visited the region to examine the geological data,” the company said, adding that the company would “make a decision on whether to bid for acreage in due course”.

Shell is the largest foreign investor in Russia and has said it wants to increase its presence further.

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