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Thread: That's gas - bills up 15% after Corrib field opens- SINDO

  1. #1

    Default That's gas - bills up 15% after Corrib field opens- SINDO

    Saturday's International Herald Tribune carried a reuters report on the interest of the energy companies to snap up licences to drill off the west coast of Ireland: http://www.iht.com/articles/2008/08/24/ ... ireoil.php

    Quote: A study commissioned by the Irish government said early data showed potential reserves of 10 billion barrels of oil off Ireland's Atlantic coast.
    ...
    Patrick Shannon, a professor of geology at University College Dublin, said while no oil discoveries had yet been made around the Atlantic margin, tests showed it might lack sulfur, making it easy to refine and more valuable.
    "Everybody wants a Brent crude or a West Texas type crude, and the Irish crude oil - certainly in the Atlantic margin - is of that quality," Shannon said. "We know there is a petroleum system, we don't know its extent."


    The article painted a somewhat incomplete picture of the generous tax and royalty regime in Ireland:

    Quote: Exploration companies pay a 25 percent tax in Ireland, which rises to 40 percent for the most profitable finds - lower than the 50 percent rate in the United Kingdom, 78 percent in Norway and over 80 percent levied in other regions.

    Perhaps the journalist was unaware that exploration and "development" costs can be written off against tax, and the higher charges (40%) don't apply to fields like Corrib which were licensed before 2007. The Royalty rate in Ireland is set at zero, which means that whatever you find in your licensed area belongs to you in its entirety, so all you have to pay is corporation tax on profits.

    Can anyone from the political parties which support these generous terms explain why ordinary people who live in Ireland won't see any benefit? Yesterdays's Sunday Independent Newspaper carried a story showing that the price of gas will rise by 15 per cent after Corrib comes on stream.


    That's gas -- bills up 15% after Corrib field opens

    By MAEVE SHEEHAN
    Sunday August 24 2008


    ONCE gas production comes on stream from the Corrib Gas fields off Belmullet, Co Mayo, next year the price of gas to Irish users is set to shoot up by 15 per cent.

    Consumers are already facing a 20 per cent increase in gas bills from September. However, an internal memo from the energy regulator warns that the price will soar even higher once production starts at the Corrib gas fields next winter.

    article continues:http://www.iht.com/articles/2008/08/...eoil.php<br />


    You'd think with all the benefits going to the energy companies, and all the drawbacks going to ordinary consumers, then the least they could do is exploit the reserves safely, but you'd be wrong...

  2. #2

    Default Re: That's gas - bills up 15% after Corrib field opens- SINDO

    Quote Originally Posted by Shell to Sea
    "development" costs can be written off against tax, and the higher charges (40%) don't apply to fields like Corrib which were licensed before 2007. The Royalty rate in Ireland is set at zero, which means that whatever you find in your licensed area belongs to you in its entirety, so all you have to pay is corporation tax on profits.
    Are you suggesting that development costs can be creatively accounted for?

    Can you link to the terms as written out in the original documents please? Are those terms in the Department of Comms and Energy or Finance?

  3. #3

    Default Re: That's gas - bills up 15% after Corrib field opens- SINDO

    Dáil Éireann - Volume 537 - 12 June, 2001

    Written Answers. - Corrib Gas Field.

    Mr. Ring

    149. Mr. Ring asked the Minister for the Marine and Natural Resources the monetary benefits which will accrue as a result of the Corrib Gas Field; and the benefit it will bring to the people of north Mayo. [16732/01]

    Mr. Fahey

    Minister for the Marine and Natural Resources (Mr. Fahey): The current fiscal terms for exploration and exploitation of petroleum offshore Ireland are governed by the provisions pertaining to petroleum contained in the Finance Act, 1992. Under this Act, corporation tax at a rate of 25% will apply to profits from gas production under the petroleum lease for the Corrib field. The corporation tax will be payable after the deduction of allowances. These allowances relate to capital and operating expenditure and abandonment costs for the field. In addition, exploration costs are also deductible, which need not necessarily be field related, provided they have been incurred in the 25 year period immediately prior to the commencement of field production. The corporation tax accruing will depend on a number of factors, including those referred to above, and the amount and price of the gas sold.


    A journalist told some Shell to Sea activists in 2006 that Shell intended to count everything they could get away with, security, press and public relations, building costs in Dublin, telephone bills, and best of all the legal costs for taking the Rossport Five to court as "exploration costs (not necessarily be field related).

    It may be that this is not true, but the company's record would hardly inspire confidence that Shell are not going to do their best to avoid paying tax where possible.

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    Default Re: That's gas - bills up 15% after Corrib field opens- SINDO

    Quote Originally Posted by Shell to Sea
    Quote: Exploration companies pay a 25 percent tax in Ireland, which rises to 40 percent for the most profitable finds - lower than the 50 percent rate in the United Kingdom, 78 percent in Norway and over 80 percent levied in other regions.
    Simple Facts for Rent-An-Issue Hippies (Part 1):

    Number of successfully drilled fields in Norway, UK and Ireland in last 30 years:

    UK (North Sea & Irish Sea): 89
    Norway (NCS): 26
    Ireland (Atlantic): 1

    http://en.wikipedia.org/wiki/List_of_oi ... _North_Sea
    A demagogue is someone who will preach doctrines he knows to be untrue to men he knows to be idiots.

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    Default Re: That's gas - bills up 15% after Corrib field opens- SINDO

    Quote Originally Posted by goosebump
    Quote Originally Posted by Shell to Sea
    Quote: Exploration companies pay a 25 percent tax in Ireland, which rises to 40 percent for the most profitable finds - lower than the 50 percent rate in the United Kingdom, 78 percent in Norway and over 80 percent levied in other regions.
    Simple Facts for Rent-An-Issue Hippies (Part 1):

    Number of successfully drilled fields in Norway, UK and Ireland in last 30 years:

    UK (North Sea & Irish Sea): 89
    Norway (NCS): 26
    Ireland (Atlantic): 1

    http://en.wikipedia.org/wiki/List_of_oi ... _North_Sea
    So how does that justify us handing over our natural resources for free to profiteers?

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    Default Re: That's gas - bills up 15% after Corrib field opens- SINDO

    Quote Originally Posted by AAA
    Quote Originally Posted by goosebump
    Quote Originally Posted by Shell to Sea
    Quote: Exploration companies pay a 25 percent tax in Ireland, which rises to 40 percent for the most profitable finds - lower than the 50 percent rate in the United Kingdom, 78 percent in Norway and over 80 percent levied in other regions.
    Simple Facts for Rent-An-Issue Hippies (Part 1):

    Number of successfully drilled fields in Norway, UK and Ireland in last 30 years:

    UK (North Sea & Irish Sea): 89
    Norway (NCS): 26
    Ireland (Atlantic): 1

    http://en.wikipedia.org/wiki/List_of_oi ... _North_Sea
    So how does that justify us handing over our natural resources for free to profiteers?
    All OGE in Northern Europe is carried out by private companies.

    Certain countries reserve the right to take a public stake in individual fields when awarding licenses. When they do, they have to pay the costs associated with that stake from taxpayers founds.

    In the early days of exploration in the UK and Norway, the State did not invest in exploration. This only began when it became clear that there were proven reserves and after a number of successful drills. The Governments of the time took the view that it would be irresponsible to spend tax payers money on highly-speculative OGE.

    Only 1 successful drill has been completed in Irish waters in the last 30 years.

    You and your pinkard friends are arguing that we should spend hundreds of millions of taypayers money on speculative OGE, when it is far from certain that any meaningful return will accrue.

    More responsible and realistic people believe that we should allow the private sector to bear the initial risk and infrastructural costs, such that we can properly estimate the value of the reserves, wherein we can then begin to make more informed choices about whether or not the State should invest in OGE, as was the case in the UK and Norway.

    Its not exactly rocket science.
    A demagogue is someone who will preach doctrines he knows to be untrue to men he knows to be idiots.

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    Default Re: That's gas - bills up 15% after Corrib field opens- SINDO

    Why should the state be in a hurry to drill and discover anything ? Whats wrong with waiting 10,20 or 50 years and letting the desperation for reserves of the oil and gas companies drive them to our shores? At which point anything which is found will have been probably the best investment the state ever made and possibly way better even than the national pensions reserve fund. Why is Ireland cursed with politicians and leaders who only think of the short term consequences of their actions and decisions? Lets' do our children and their children and the nation a favor.

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    Politics.ie Member wombat's Avatar
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    Default Re: That's gas - bills up 15% after Corrib field opens- SINDO

    The reasoning behind the Indo article appears to be that once Corrib comes ashore, the 2nd interconnector will be redundant but will still have to be paid for by Bord Gais and they must pass the costs on to the consumer. I must admit I did not quite follow their reasoning, it sounds like another stealth tax to me.
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    Default Re: That's gas - bills up 15% after Corrib field opens- SINDO

    Quote Originally Posted by fionnmccool
    Why should the state be in a hurry to drill and discover anything ? Whats wrong with waiting 10,20 or 50 years and letting the desperation for reserves of the oil and gas companies drive them to our shores? At which point anything which is found will have been probably the best investment the state ever made and possibly way better even than the national pensions reserve fund. Why is Ireland cursed with politicians and leaders who only think of the short term consequences of their actions and decisions? Lets' do our children and their children and the nation a favor.
    Errrr because they only think about winning the next election and lining their own pockets. They don't look beyond that.

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    Politics.ie Member wombat's Avatar
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    Default Re: That's gas - bills up 15% after Corrib field opens- SINDO

    Quote Originally Posted by fionnmccool
    Why should the state be in a hurry to drill and discover anything ? Whats wrong with waiting 10,20 or 50 years and letting the desperation for reserves of the oil and gas companies drive them to our shores? At which point anything which is found will have been probably the best investment the state ever made and possibly way better even than the national pensions reserve fund. Why is Ireland cursed with politicians and leaders who only think of the short term consequences of their actions and decisions. Lets' do our children and their children and the nation a favor.
    This is a valid argument, although its not one I agree with. The value of the Corrib find has increased due to the delays in bringing it ashore. Its likely that some of the finds which were too small or difficult to exploit will become viable but there is no evidence to support the wishful thinking that colours most of the posts.
    There is a huge difference in the value of a gas find compared with an oil strike. If someone strikes oil, the interest in exploration licences will increase and terms can be renegotiated, until then, royalties & taxes will be as relevant to the govt. revenue as lotto tickets are to the rest of us.
    Beer is proof that God loves us - Benjamin Franklin

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