Frank Fahey sees Shell on the sea shore

[feargach]

Does anybody have any insights into the following question:

Imagine the government falls. The new Cabinet immediately approves a €5 billion levy on the consortium, and the relevant minister introduces legislation making all facilitation of the project dependent on this.

The new government appoints people to An Bord Pleanála who are openly hostile to any special treatment or facilitation of the consortium, unless it has paid its dues to the Irish state.

Assuming all the above, is it possible that the consortium would have grounds for legal action against the state?

If the state has entered into legally binding agreements with the consortium, are these potentially exempt from FOI? Or do citizens have the legal right to inspect them?

[FakeViking]

The difficult ynow is that Shell have been put through the ringer, which sends out all the wrong signals to other companies considering seeking exploration rights.

When you say "put through the ringer" do you mean "not allowed to ride roughshod over the local community"?

[feargach]

But for that to happen, we need to build up refinement and distribution capacity, and expertise and knowledge about OGE in our territorial waters, so that the State knows the risks involved before commiting public funds to exploration projects. For that, we need private companies like Shell.

The difficult ynow is that Shell have been put through the ringer, which sends out all the wrong signals to other companies considering seeking exploration rights.

I fully expect that we won't see the development of any more fields for at least 20 years.

Meh, it's not necessary.

In the future if we want to persuade a company to explore or exploit an Irish resource, there's a very simple way to ensure it happens: escrow.

Escrow - Wikipedia, the free encyclopedia

You stick a bunch of assets into an account, say €1bn. You set up the account in some high-reputation foreign escrow firm. Somewhere like Luxembourg or Geneva. You leave instructions with the escrow firm that if the company is prevented from exploiting the resource by agents in the pay of the Irish state for any reason then they are required to hand the assets over to the exploration company.

Such an arrangement eliminates the risk from the company's side. Of course the state remains exposed to risk, but it can chase these in court if the company fails to behave honestly.

[Malbekh]

The contract between the State and Shell was signed before exploration commenced and before anything substantive was known about the field.

As time passes, and oil becomes more valuable, it will be possible for the State to take a share of these finds.

But for that to happen, we need to build up refinement and distribution capacity, and expertise and knowledge about OGE in our territorial waters, so that the State knows the risks involved before commiting public funds to exploration projects. For that, we need private companies like Shell.

The difficult ynow is that Shell have been put through the ringer, which sends out all the wrong signals to other companies considering seeking exploration rights.

I fully expect that we won't see the development of any more fields for at least 20 years.

This is all very interesting but doesn't address the theme of the thread. Shell's difficulty stems from Fahey's errors and mismanagement, for which I have yet to hear a satisfactory explanation for his actions.

If people want to start a thread on taxation of oil companies be my guest. My purpose is highlighting another topic, the clue for which is in the thread title.

[Mic]

Thanks tonic for those details. You're a mine of information
Does it not seem odd though that we are so desperate to get oil companies interested that we're willing to forego all rights to it, except for 25% tax on profits? If some oil is uneconomic to extract because of the low price of oil, what is the rush to get it extracted while oil prices are low with zero royalties?

Not to tonic/HAL/TonyS.

On the other hand, if FG or anybody but FF did an identical deal, it would seem like treason to tonic/HAL/TonyS.

Peculiar, huh?

And you know all this how exactly?

Just to say that at the time of the reduction to 25% tax, NO PARTY, not Labour and not FG, had a problem with the proposal.

I also know it's a waste of time to point that out to you, you'll still go around with your head stuck somewhere dark and refusing to see anything that doesn't fit with your very fixed mind set.

Eh, tonic. I don't know if you've noticed, I asked two specific questions which I expect would be in the mind of many on reading your post.
You've not done your argument any service in the manner in which you purported to answer them. The most disheartening thing about politics.ie is the apprent sockpuppetry by people who seem to be very well informed, very articulate, yet inexplicably unable to understand simple questions.
Perhaps you really think you answered the questions. Maybe you're a civil servant or parliamentarian who believes akwards questions are best answered with with vaguely relevant verbiage and bluster

Ok. No party opposed the 25% tax rate. So, by implication, are you stating that the elimination of the state royalties/interest was opposed?
Obviously, a case could be made that retaining a 50% tax rate was seen as preferrable to keeping any share of royalties, but to do justice to your story, you might want to make that case, or is it so obvious that i must have my head somewhere dark for asking it?

As it turned out his concern was well founded. Even with the changes he made there was still no exploration activity until the change made to the tax rate in '92.

So, you're left with cynicism on the one hand but also with the reality that the changes he made weren't enough to interest the oil companies.

Ah. So there was no oil exploration activity in Irish waters until '92?
Thanks for the info. Do you mind me asking, where to you get it from?

[Mic]

Logic will do.

<snip>
having read your posts under various noms de plume for a long time, I tend to view them as essentially the work of a propagandist with a very definte agenda rather than an expression of your individual opinion.
<snip>

Just thought I might split this hair with you. Your form of argument here is not commonly known as logic. I would have learn the the term "anti-logic", and I believe it is more commonly know as judgement. That doesn't reflect any judgement on my part as to the authenticity or usefulness of this form of argument: it's just not called logic
As I said was saying to tonic, politics.ie seems to be blessed with a number of well informed and literate posters with a strange gift for missing the point of an argument. Maybe it's just human nature.

[feargach]

This is all very interesting but doesn't address the theme of the thread. Shell's difficulty stems from Fahey's errors and mismanagement, for which I have yet to hear a satisfactory explanation for his actions.

If people want to start a thread on taxation of oil companies be my guest. My purpose is highlighting another topic, the clue for which is in the thread title.

So your entire thread revolves around an allegation that a member of the Ahern government made some major errors in judgement? A quick glance at the unemployment figures and waiting lists must surely suggest that this is a non-story.

[Mic]

Mr Fahey could easily have insisted on Shell refining the gas at sea, an option more expensive, but without all the added controversy.

A bit like Justin Keating insisting that the likes of Shell hand over 50% of the value of their finds, which resulted in how many finds?

That's unfair. We are not dealing with potential finds, we are dealing with a known find with a known quantity of high quality gas, with the potential for further finds in that quadrant.

Getting the gas to shore is an issue for the consortium, not the state. It is not the business of the state to facilitate the consortium in the manner that Fahey did for which there was no known benefit. This is the contention of the thread.

The contract between the State and Shell was signed before exploration commenced and before anything substantive was known about the field.

As time passes, and oil becomes more valuable, it will be possible for the State to take a share of these finds.

But for that to happen, we need to build up refinement and distribution capacity, and expertise and knowledge about OGE in our territorial waters, so that the State knows the risks involved before commiting public funds to exploration projects. For that, we need private companies like Shell.

The difficult ynow is that Shell have been put through the ringer, which sends out all the wrong signals to other companies considering seeking exploration rights.

So first Frank Fakey could not have insisted on Shell refining the gas at sea becase it wouldn't result in any finds. Now it is because this was in contained in a contract already signed?
Or was this verbiage just for the purpose of blowing smoke to make space for your followup point?
At least, this form of argument isn't likely to convince any rational reader. It just turns this reader, and I imagine others, off politics.ie altogether. Do you feel good about that?

Regarding your point about shell being hard done by, I came across an article with David Horgan of Petrel Resources are saying words to that effect.
Oil price hike fails to spark Irish exploration: ThePost.ie

It is expensive and the returns are poor. The only positive thing was thinking there was zero political risk, but with the hummings and hawings the minister made about Shell taking up the pipe, that might not ring true any more.

It is one of the more extreme views presented in the article, but I'm sure we can expect many companies to echo it. Not sure that it's particularly justified myself.
At l have the impression that Shell put in a lot of the legwork in building this into a needless controversy themselves. I expect other companies would be aware they have form in that regard.

I fully expect that we won't see the development of any more fields for at least 20 years.

Neatly bringing us back to the question. Compared to giving them away for SFA, is it such a bad thing for it to be left for a few more years?

[Mic]

So your entire thread revolves around an allegation that a member of the Ahern government made some major errors in judgement? A quick glance at the unemployment figures and waiting lists must surely suggest that this is a non-story.

I suppose the difficulty is in trying to establish whether it was an an innocent error of judgement, or something else.
A quick perusal of the history of the Shell project in Mayo might suggest that the handling of this project by Shell and by members of government and the consequences of that is anything but a non-story. I imagine though it can be viewed as a non-story to those of us who don't live nearby.

[Malbekh]

So your entire thread revolves around an allegation that a member of the Ahern government made some major errors in judgement? A quick glance at the unemployment figures and waiting lists must surely suggest that this is a non-story.

Please tune in to RTE at 10:55 tonight, it might enlighten you as to why Frank Fahey is such a topical figure these days.