Corrib Gas Field

Bock the Robber

SLUSK wrote: »

What competency does the national or local government have to do exploration and drilling for oil?

Seems you advocate a Venezuelan style nationalization of the energy industry... don't be surprised if you end up like Venezuela if this policy is implemented...

Don't put words in my mouth. I didn't suggest that the government explore for oil -- or gas for that matter.

I suggested that it was wrong to give Shell our gas for nothing and that they should pay us for it.

Does that make me another Hugo Chavez? In that case, the Norwegians and Brits are also raving commies.

Interesting choice of words though: "don't be surprised if you end up like Venezuela". (My italics.)

Not "we."

Interesting.

Aidan1

€14m euro worth of gas? Where?

Corrib is a 1 terrascuf field - giving a market value of less than €4bn at today's prices. Given that the cost to bring the field to market will be well in excess of €1bn, and then there are ongoing running costs, the 'profit' will be far less than that figure. Given that the we'll be borrowing over 20bn this year, Corrib would hardly 'solve' anything.

However, even if we were to entertain the lunatic idea of 'nationalising' the field (and the State managed to avoid the punitive court case that would inevitably follow), the revenue would roll in over the next 15 years - hardly likely to provide the type of short term solution being touted here. However the State appropriating assets in the oil and gas sector would hardly encourage others to invest in exploration here. On the current course, we get both (a) tax revenue at 25% of profits, and (b) some measure of security of supply, and the potential for even more of (a) and (b) into the future.

If we were to dive in, Stalinist styleee, we'd end up sued, and with other companies re-thinking their involvement in our economy. Not so sure that's such a great idea.

Bock the Robber

Aidan1 wrote: »

If we were to dive in, Stalinist styleee, we'd end up sued, and with other companies re-thinking their involvement in our economy. Not so sure that's such a great idea.

Like those those Stalinist Americans did with their pinko lefty Oil Sense Act?

Aidan1

Have you actually read that Act?

It has nothing to do with nationalising industries, or confiscation by fiat. Rather it primarily deals with repealing reliefs granted to the large industry in the US from existing royalty legislation. Not introducing new legislation after the fact, which is what you are proposing.

However, there is a critical issue of scale here. Corrib is a small field. Diving in to the market in a disruptive way for the sake of one small field would merely ensure that no-one would go near the Irish offshore for years to come. The recent terms allow for a greater take (greater than the 25% under the old terms) - so if we get lucky, and find a big one that's actually exploitable, it's game on. Corrib is bait, in that sense.

Now, are you going to correct the factual inaccuracies in your OP?

Bock the Robber

Where did you see me talking about nationalisation or confiscation?

The Oil Sense Act was designed to deal with precisely the problem that we see in Corrib where energy companies were given sweetheart deals. It provides that any energy company currently failing to pay its fair share will not be licensed for future exploration.

As regards the OP, please state what inaccuracies you refer to.

If it's the valuation of the field, that's a red herring designed to distract attention from the fact that this State should not be giving away its resources to anyone, especially in the economic situation we find ourselves in. If you think 5 billion is small money, you're stuck in the mindset that afflicted Fianna Fail when they thought they had endless cash to waste.

You value it your way and I'll value it mine. It makes no difference. You say tomayto and I say tomato.

On the other hand, if the inaccuracy is the statement that Shell pay nothing to ireland for our natural resources, that's simply a fact.

You think Corrib is bait? The Corrib deal was given to us by a convicted crook and a man who happily bestowed over a billion of your money and mine on the religious orders to bail them out. You flatter these cowboys.

Aidan1

Well, if you think that there's no substantial difference between €5bn and €14bn, we have bigger problems. It is not a matter of pronounciation, it is, well, €9bn. Your suggested value was almost three times mine - this is not just a detail. For info - if you'd done any research, you'd have found that my figure of €5bn is very high - on today's prices and FX rates, the actual figure is around €4bn. I've left 25% of room in there to cover the likely price increases.

It is also summarily untrue to suggest that Shell pay nothing - the relevant piece of legislation has already been linked here.

Also, Shell did not get a 'sweetheart deal' - they got exactly the same deal that was open to any developer - the terms were set out in legislation years before Corrib was ever found (1996 - with Shell not becoming involved until years later).

For that simple reason, this:

The Corrib deal was given to us by a convicted crook

is completely and verifiably untrue.

Bock the Robber

We have bigger problems than you think, when our own people can't see any objection to transferring vital assets to a third party with no return to the State.

It's an education to see so many Irish people committed to the profits of an energy multinational.

It gets worse: these same Irish people see no difficulty in handing our natural resources to that multinational free of charge.

Depressingly, it amounts to this: we gave our gas away, and get nothing in return.

Unless, of course, you have figures showing how much the country will actually get from the Corrib field, apart from a few jobs.

yuloni

This post has been deleted.

Bock the Robber

That's exactly my point. Shell pay nothing for the gas.

eoinbn

Bock the Robber wrote: »

That's exactly my point. Shell pay nothing for the gas.

Of course they paid nothing for it, nobody knew how much, if any, was out there. They took the risk to drill, it paid off.

yuloni

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Bock the Robber

Your question isn't clear. Are you asking me what percentage I think we should own or are you askling if the company should pay corporation tax on their profits, or are you asking both?

yuloni

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Bock the Robber

It should be far more structured than that. What you describe sounds like buying a greyhound in the carpark of a pub.


Britain has 50% shared ownership and charges coorporation tax on whatever profits the exploration company makes after that

Norway has 51.5% shared ownership and levies 78% tax on the company's profits.

Since I'm not an economist, and don't claim to be, I won't give you a percentage that I think is correct, but I agree with the principle of shared ownership combined with corporation tax on profits.

Finally, though I'm not an economist, I do have a sense of smell, and I know when something stinks.

Sponge Bob

Why do these bull**** arguments get dragged up again and again ??

Enterprise ( not Shell) took the risk . The lucked out .

Aidan1

Bock - you've tried to evade every single point of fact put to you. In the space of a couple of hours, the resource has shrank by 60%, it has been pointed out that Mr Burke could not have made any 'deal' with Shell, that the State does get a take from the Corrib field, and that there is an underlying rationale behind the terms provided. And yet you pretend that none of these things impinge.

Here's a gentle hint for you - find a definition of prospectivity, and have a look at how Ireland compares with those other countries you have mentioned, and then try and get a handle on why different countries offer very different fiscal terms. And lets not just look at Norway, given that it's one of the largest exporters of hydrocarbons in the world. Look at the terms offered by France, or Spain, or other marginal resource areas.

And then have a look at the chronology of events, and try and work out why and how the terms changed as they did. If you can wrap your head around that, you should have a clearer understanding of what happened. It's very easy to make blithe assertions that there must have been some underhand dealings when you chose to operate in a fact free vacuum. Lets try it with at least one foot in reality, shall we?

Bock the Robber

Ray Burke is a sideshow, who needs to be investigated, but a sideshow nonetheless. Likewise, the under- or over-valuation of the resource has no relevance to the central issue, which is the transfer of our national assets to a private company for nothing in return.

If we think like peasants, and act like peasants, we'll be treated like peasants.

Guess what? It looks like we're peasants, with a few local land-agents thrown in to keep us in line.

Your use of industry jargon suggests that you have connections with the exploration business, and therefore might not be entirely objective. Or am I mistaken about that?

Aidan1

You are entirely mistaken.

Your continued mischaracterisation of the issues is a fairly obvious barrier to continued debate though. If you insist that your original position was correct, despite it having been shown that your basis for making those claims were entirely inaccurate, then we'll just have to leave you with your opinion that everyone else is wrong, that we're all peasants, and only you have the correct analysis (reality notwithstanding).

Bock the Robber

You seem to be well informed about the energy industry, while I'm just a citizen outraged at hospital and school closures at the same time that our wealth flows out of the country and into the bank accounts of a huge oil company.

So yes. I'm just an ill-informed member of the public, who has the cheek to ask impertinent questions of my betters, and who is concerned at having to pay more taxes while my children hunt around for jobs and the national debt grows beyond all historic levels.

Silly me.

How dare I question the deal to hand our gas resources to Shell?

Call me an old Commie if you like.

Call me stupid if you want. I probably am fairly stupid, and I certainly don't have the level of financial facts available to an oil-industry insider, but how would I?

Nevertheless, maybe we can turn this to our mutual advantage, so let me ask you to throw light on the subject.

What other countries, apart from Ireland, don't insist on having shared ownership of their energy resources?

Could you also list the countries that do insist on shared ownership?

What other countries, apart from Ireland, don't require any royalty payments?

Could you also please say whether the tax write-offs available to Shell include not only their exploration and development costs, past and present, but also the ultimate cost of closing down the operation after they have taken all the gas?

And finally, can I ask you how you have explained the increasing shortage of money to your children?

Sponge Bob

Bock the Robber wrote: »

You seem to be well informed about the energy industry, while I'm just a citizen outraged at hospital and school closures at the same time that our wealth flows out of the country and into the bank accounts of a huge oil company.?

Well buy a feckin calculator then willya

The last outbreak of complete muppetry on the subject of Corrib was a few months back in this thread below in this forum. Would it have hurt awfully to search ???

http://www.boards.ie/vbulletin/showthread.php?p=60787634#post60787634

Once the discussion got into economics, engineering and hard numbers the muppets disappeared .

bauderline

Bock the Robber wrote: »

So yes. I'm just an ill-informed member of the public, who has the cheek to ask impertinent questions of my betters, and who is concerned at having to pay more taxes while my children hunt around for jobs and the national debt grows beyond all historic levels.

Ahhh don't worry about it.... David Begg says it fine for it to go up to 118% the same as Italy.....

It must be okay then.....

Bock the Robber

Sponge Bob wrote: »

Once the discussion got into economics, engineering and hard numbers the muppets disappeared .

Interesting mindset you reveal..

Ireland's survival debate: only economists and oil executives need apply.

Sponge Bob

Did you learn anything from that other thread ????

If so .....what!?!

kippy

Bock the Robber wrote: »

That's exactly my point. Shell pay nothing for the gas.

"Shell pay nothing for the gas"
Are you serious? Completely serious?

If nothing includes:
1. Cost of equipment. (And associated VAT)
2. Cost of staff wages. (And associated PRSI, Taxation, pensions etc)
3. Cost of R and D. (as above)
4. Construction costs. (as above)
5. Ongoing costs on a daily basis.
6. Tax on all GAS taken from the ground
7. I believe there was also a nominal fee for exploration licence paid to the government.

What are you proposing that we do?
Charge Shell more? They are getting charged a tax that is based on the amount of material they "harvest", so the more they harvest the more we get. The also need to invest significent sums of money to do this. NOT ALL, in fact very little is written off against tax.
In fact, most businesses are allowed to do this type of thing, why not Shell?

The only other option is for the government to set up an arm to do all this themselves, at significent cost. Are you proposing this?

TBH, this whole Shell, gas thing has really taken our eye of what forms of energy the government should be investing in and what areas of r and d that should be supported.
Renewable, tidal, wind, wave, solar etc.
They we wouldnt be worried about our energy supplies into the future.