"Conned" German article on Irish state of affairs

Ash.J.Williams

Scofflaw wrote: »

Personally, I'd rather we developed our alternative energy industries, because we know we have plenty of wind and waves out there. We can play second fiddle in the petroleum stakes - well, not even second fiddle in the orchestra, more a mouth-organ in our bathroom, badly - or we can aim for a new industry where we can develop useful and relatively unique expertise, without even mentioning climate change and fossil fuel dependency.

cordially,
Scofflaw

Rugby knob head mcgurk was on "the last word" and i'm damn near 100% sure he said we should stop wind farming and start fracking.

Scofflaw

Ash.J.Williams wrote: »

Rugby knob head mcgurk was on "the last word" and i'm damn near 100% sure he said we should stop wind farming and start fracking.

Sure, but then McGuirk doesn't believe in climate change, and suffers from the standard climate change sceptic's deep manly love of fossil fuels and belief that alternative energy is a subsidised hippy pork barrel.

cordially,
Scofflaw

micosoft

who_me wrote: »

Well, the oil isn't going anywhere, and as drilling methods evolve and other reserves are being depleted, what's an uneconomical oil basin now might well be very profitable in the near future.

I'd rather we sat on the oil reserves, and make money from them in the future, than offer giveaway terms now and lose out on a massive, once-off financial opportunity.

To my mind, there seems to be an incredible lack of spine from our representatives, we seem to always be playing the "poor wee Ireland, sure what can we do? Maybe if we give in on all points, they'll treat us well" card. If Ireland were a girlfriend, it would be downtrodden, beaten girlfriend who still keeps begging her man to come back because she's convinced she could never get anyone else.

With the oil finds, we could be in a position of real negotiating strength. Let's not run up the white flag just yet..

Jesus wept. WE NEED THE MONEY NOW. Not in 10/20/30/40 years, NOW. Has the fact we are a bankrupt state evaded your reality field.

I think your analogy needs a bit of work. Ireland is the overweight and unattractive girl sitting in a room of models and has never had a boyfriend and looks even less likely to get one because when spoken to, her personality has some sort of entitlement complex that makes her think she is a model because "she's worth it".

Technology is not the problem - it's cost to recover vs oil prices. I doubt technology will ever get rid of the difficulty of drilling in the Atlantic ocean and no technology will magic that away. It's simply easier and cheaper to go for Shale Oil or other alternatives on dry land. The US will be energy independent in 2030 so it seems likely that your pot of gold at the end of the rainbow might well be empty.

Potatoeman

Scofflaw wrote: »

To "make money from Ireland's resources" is the point of the current Irish petroleum tax regime. S2S etc insist that our tax regime is a "giveaway", despite which virtually all Irish waters remain unexplored, and only 130 wells have been drilled.

If you want to sell the right to prospect somewhere where only two significant commercial discoveries have been made in 50 years of exploration (and please don't reply with a list of current possibilities, because none of them have yet been found to be commercial), and you want people to take you up on that, then you need to make it attractive for them to do so.

Oil companies aren't put off exploration/development by stiff tax regimes where they know there's a good chance of finding oil in decent quantities. Where there's only known to be a small chance of finding small quantities, they are, because there are plenty of better places to put their effort.

We can have an oil tax regime that looks extremely attractive to us - high taxes, required government involvement, resource rents, no write-offs, etc - and no exploration.

Or we can have one that looks extremely attractive to oil companies - low taxes, no required government involvement, no resource rents, good write-offs - and still only a tiny amount of exploration.

We're just not a good prospect, as far as is yet known, and that's basically that. It's not good business sense for companies to spend hundreds of millions in Irish waters with little chance of a decent find, when they can spend the same money in Norwegian waters with ten times the chance of a find and 80% of their money back if they don't make one.

Feel free to tell me I'm "talking down Irish oil".

cordially,
Scofflaw

The fact that we dont know whats there does not mean we should give it away. We can leave the resources there for future generations instead of trading them for whiskey and beads.
Most of the jobs created will be specialist so Im not convinced of the advantage these will bring to the area.

Scofflaw

Potatoeman wrote: »

The fact that we dont know whats there does not mean we should give it away. We can leave the resources there for future generations instead of trading them for whiskey and beads.
Most of the jobs created will be specialist so Im not convinced of the advantage these will bring to the area.

There's a slight problem with that view, though, which is that without a promise to "give it away" (we're not, but I'll let that slide here), we won't ever know what's there, because nobody will bother going to find out.

cordially,
Scofflaw

Potatoeman

Scofflaw wrote: »

There's a slight problem with that view, though, which is that without a promise to "give it away" (we're not, but I'll let that slide here), we won't ever know what's there, because nobody will bother going to find out.

cordially,
Scofflaw

Just because we cant find it now does not mean we never will.

Scofflaw

Potatoeman wrote: »

Just because we cant find it now does not mean we never will.

OK, not sure that came across properly. For us to find whatever may be out there, and assuming there is something out there, someone has to spend money searching for it.

That's either going to be us - the Irish State - or oil companies looking to make a profit from what they find. If the former, we bear all the risk, which, in the current state of finances and the known hit rate in the Irish offshore, I couldn't in all conscience support. If the latter, the tax regime has to be attractive enough to make the risk worthwhile.

That's where we are, and we can remain there indefinitely. If we make the tax regime unattractive, we never find out what's there unless we search for it ourselves, and if we're unwilling to take that risk, then we simply never find out full stop - well, unless at some point it becomes financially trivial to discover oil in unknown geology and deep waters.

cordially,
Scofflaw

View

hyperborean wrote: »

As for the fishing, the % is tiny, less than 20% of the fish in our water is landed by our boats, Billions (yes Billions) of euro worth of fish has being removed by other countries and all for what,

The multi-billions worth of corporate sales that have been "landed" in Ireland rather than in the other EU member states. And those "removed" sales have meant we - not they - get the corporate tax proceeds not to mention the income tax etc from the jobs in those companies.

Of course, we could throw all that away and resort to protectionist measures in order to protect one industry which is important in around two towns in the country but we're likely to be much worse off a result.

So, protectionism (to help fisheries) or the rest of the economy, which would you choose?

hatrickpatrick

I'll answer the posts directed to me in more detail later, just heading out the door, but a quick question: What exactly is the point of the Corrib pipeline if there's nothing to be piped from it? To everyone saying Irish oil isn't profitable, why are shell bothering to go to so much trouble to build the thing if they're not going to be making any money from it?

hatrickpatrick

micosoft wrote: »

Is this the principle that when something suits us we take it (massive CAP subsidies, Infrastructure Grants etc) but when we don't (fisheries) it's ours?

Sounds like we'd have very few friends very quickly with that approach. In our dealings with the EU we've taken a lot more then we've given.

I wasn't talking about fisheries at all, more the fact that our country got financially burned in order to save Europe's banking system, everyone knows if we'd let Anglo go the the wall the contagion would have caused utter havoc in the rest of the European banking system but at the same time everyone says we've taken a lot more than we've given? That 60bn we put into Anglo is something I regard as a free bailout for the entire European stock market and I've never seen a single convincing argument to suggest that it wasn't. Who were those bondholders again...?

Potatoeman

Scofflaw wrote: »

OK, not sure that came across properly. For us to find whatever may be out there, and assuming there is something out there, someone has to spend money searching for it.

That's either going to be us - the Irish State - or oil companies looking to make a profit from what they find. If the former, we bear all the risk, which, in the current state of finances and the known hit rate in the Irish offshore, I couldn't in all conscience support. If the latter, the tax regime has to be attractive enough to make the risk worthwhile.

That's where we are, and we can remain there indefinitely. If we make the tax regime unattractive, we never find out what's there unless we search for it ourselves, and if we're unwilling to take that risk, then we simply never find out full stop - well, unless at some point it becomes financially trivial to discover oil in unknown geology and deep waters.

cordially,
Scofflaw

My point was to leave it there until we are in a better situation rather than giving it away.

clairefontaine

It looks like it would have made more sense to borrow money for drilling, have control over your energy resources, sell and profit, rather than borrow money for banks and sell off rights to foreign investors.

oscarBravo

clairefontaine wrote: »

It looks like it would have made more sense to borrow money for drilling, have control over your energy resources, sell and profit, rather than borrow money for banks and sell off rights to foreign investors.

...and if the drilling produced little or no oil or gas?

clairefontaine

oscarBravo wrote: »

...and if the drilling produced little or no oil or gas?

You aren't going to know until you look.

Oil companies didn't make their money by NOT doing anything in case they found nothing.

who_me

Scofflaw wrote: »

Personally, I'd rather we developed our alternative energy industries, because we know we have plenty of wind and waves out there. We can play second fiddle in the petroleum stakes - well, not even second fiddle in the orchestra, more a mouth-organ in our bathroom, badly - or we can aim for a new industry where we can develop useful and relatively unique expertise, without even mentioning climate change and fossil fuel dependency.

cordially,
Scofflaw

Great, if/when that's practical. I don't know how economically viable they are yet. Now, if money from a short 'oil boom' could be enough to kick start a substantial renewable energy infrastructure, that would be something.

who_me

micosoft wrote: »

Jesus wept. WE NEED THE MONEY NOW. Not in 10/20/30/40 years, NOW. Has the fact we are a bankrupt state evaded your reality field.

I think your analogy needs a bit of work. Ireland is the overweight and unattractive girl sitting in a room of models and has never had a boyfriend and looks even less likely to get one because when spoken to, her personality has some sort of entitlement complex that makes her think she is a model because "she's worth it".

Technology is not the problem - it's cost to recover vs oil prices. I doubt technology will ever get rid of the difficulty of drilling in the Atlantic ocean and no technology will magic that away. It's simply easier and cheaper to go for Shale Oil or other alternatives on dry land. The US will be energy independent in 2030 so it seems likely that your pot of gold at the end of the rainbow might well be empty.

We are a bankrupt state that isn't going to be getting any money from our oil reserves soon enough to make any substantial difference, and - with a giveaway licensing/tax structure - nor are we likely to benefit from it enough to make a substantial difference.

I was under the impression that advances are being made in the drilling tech all the time, now that the financial incentive is there to do it. Transocean just broke the drilling depth record this year, didn't it?

I wouldn't be too worried about the US, China and India could more than make up the demand.

oscarBravo

clairefontaine wrote: »

You aren't going to know until you look.

Right, but what if you look and don't find anything? Then you've borrowed billions with nothing to show for it.

You think that's a good idea for a country that can't pay its bills as it stands?

clairefontaine

oscarBravo wrote: »

Right, but what if you look and don't find anything? Then you've borrowed billions with nothing to show for it.

You think that's a good idea for a country that can't pay its bills as it stands?

Yes. I always wondered why they didn't do it when they had money.

oscarBravo

clairefontaine wrote: »

Yes. I always wondered why they didn't do it when they had money.

You don't think the government would have been berated for wasting money on risky oil exploration even when we had the money to waste?

"Why are we pouring money down holes in the ocean floor instead of building hospitals?" etc etc...

clairefontaine

Yes I suppose they had other important things to pay for like RTE and FAS and the HSE bottomless pit of bureaucracy.

PeadarCo

hatrickpatrick wrote: »

I wasn't talking about fisheries at all, more the fact that our country got financially burned in order to save Europe's banking system, everyone knows if we'd let Anglo go the the wall the contagion would have caused utter havoc in the rest of the European banking system but at the same time everyone says we've taken a lot more than we've given? That 60bn we put into Anglo is something I regard as a free bailout for the entire European stock market and I've never seen a single convincing argument to suggest that it wasn't. Who were those bondholders again...?

It is amazing after all these years that people have learnt nothing about the financial crisis. We bailed out the banks to save ourselves. Had they gone bust any company relied on them for working capital would also have gone. Any money in the banks would have vanished overnight a bankrupt bank can't honour its commitments. Did it benefit Europe yes buts like a putting out a fire in your house and then asking your neighbour to pay for it because if the fire got out of control it would have burnt down their house as well.

And that's to ignore that other European governments including the Germans had to bail out some of their own banks. Should we pay for their bailouts because we potenially benefited? Not to mention we would have a deficit regardless due to the collapse in our tax take due to property bubble popping. If the private sector went on top of this austerity would have been far worse and no body would have been prepared to lend us money to relatively speaking soften the blow.

But to be fair its nothing different from our legendary oil reserves or fisheries. Put in one or two facts and make extrapolations based on this while ignoring other facts that don't fit and potential consequences of any actions that might be taken. This brings a nice conclusion where the world is perfect and simple. This means not having to deal with the complexities of reality and the difficult decisions politicians have to make.

View

hatrickpatrick wrote: »

I wasn't talking about fisheries at all, more the fact that our country got financially burned in order to save Europe's banking system, everyone knows if we'd let Anglo go the the wall the contagion would have caused utter havoc in the rest of the European banking system

There is no evidence that a bank the size of Anglo was in any way systematically important to the European banking system. Or that it would have caused contagion or utter havoc in the wider European system if it had been let fail.

It probably would have in Ireland but since then a lot of people have argued since then that Anglo wasn't systematically important to the Irish banking.

Hence, there are two claims being made by various commentators to the public, namely;

1) Anglo wasn't important to us and should have been let fail (by us),

AND, at the same time:

2) Anglo was SO important to the European banking system it had to be saved and we "saved Europe"

Those directly contradict each other since they would require Anglo to have operated on a massive EU wide scale with only minimal focus on Ireland to square them. That clearly wasn't the case since Anglo, like our other banks, was almost exclusively focused on property, most of it Irish related.

Scofflaw

who_me wrote: »

Great, if/when that's practical. I don't know how economically viable they are yet. Now, if money from a short 'oil boom' could be enough to kick start a substantial renewable energy infrastructure, that would be something.

I think we're there, economically. Alternative energy provided about 13% of global energy production in 2010, with the nuclear sector providing another 3%.

In 2012, the fossil fuel sector received $409bn in subsidies globally, while the renewables sector received $60bn.

Those are almost exactly equivalent levels of subsidy per percent of global energy provided - very slightly higher for the fossil fuel industry, in fact.

cordially,
Scofflaw

Seaneh

K-9 wrote: »

If you had Venezuala's oil reserves it might just work.

Then again if you actually struck proper oil and gas reserves, we could be Norway, not Venezuala.

The Gas is there, and we can be relatively sure where it is.

What Ireland needed (when we could have afforded it) was the development of a state owned (or semi state) exploration company to go and drill the fields and then another semi state to land and process it, much like Norway.

We could still do these things, but there is no way the government will invest the money now.

Scofflaw

Potatoeman wrote: »

My point was to leave it there until we are in a better situation rather than giving it away.

And mine is we won't ever get to a better situation without either taking a large risk or offering very attractive terms to those who will take the risk on our behalf.

After all, half the kingdom and your daughter's hand in marriage looks like excessively attractive terms until you consider the risks a dragon-slayer takes, and whether one would want to take them oneself.

cordially,
Scofflaw

Scofflaw

Seaneh wrote: »

The Gas is there, and we can be relatively sure where it is.

Er, no, we can't. That's why oil companies do exploration.

Seaneh wrote: »

What Ireland needed (when we could have afforded it) was the development of a state owned (or semi state) exploration company to go and drill the fields and then another semi state to land and process it, much like Norway.

We could still do these things, but there is no way the government will invest the money now.

Sure, we could spend almost as much as we have on the banks, and with even less to show for it.

cordially,
Scofflaw

TheChizler

Hindsight is a wonderful thing!

Think about it from the government's perspective, putting hundreds of millions on a project when you would have a better chance of success putting it all on one number at the roulette table.

They're elected to run the country responsibly (many would argue that's a lost cause but that's neither here nor there). Taking that kind of risk would be unacceptable when you have that huge a responsibility to your citizens.

Scofflaw

hatrickpatrick wrote: »

I wasn't talking about fisheries at all, more the fact that our country got financially burned in order to save Europe's banking system, everyone knows if we'd let Anglo go the the wall the contagion would have caused utter havoc in the rest of the European banking system but at the same time everyone says we've taken a lot more than we've given? That 60bn we put into Anglo is something I regard as a free bailout for the entire European stock market and I've never seen a single convincing argument to suggest that it wasn't. Who were those bondholders again...?

The idea that Anglo was systemic in Europe will have to wait on someone showing that it was systemic even in Ireland. Nobody has even shown that letting Anglo go to the wall would have disrupted our domestic banking system, which is why there's such a big question-mark over its inclusion in the guarantee.

Nor did the guarantee or the bailouts prevent contagion in Europe - the other countries had to institute their own bank guarantees and bailouts to stabilise their banking systems.

This belief that we were Europe's little Dutch boy is another self-aggrandising myth. But, I suppose that on a thread in which we're back to trillions in oil and gas which can be scooped up with a spoon along with a garnish of diamond-encrusted fish, why not?

cordially,
Scofflaw

eVeNtInE

This post has been deleted.

Dave!

Good letter in the Irish Times today in response to this

Sir, – I refer to the article by Christian Zaschke, first published in the Süddeutsche Zeitung and reprinted in The Irish Times (Weekend Review, July 6th). As far as the section on oil and gas is concerned, it would be tedious to dissect the article line by line. Just two points, then.

Firstly, simplistic comparisons of headline tax rates lead to wrong conclusions. For example, a well (the only one this year) is currently being drilled off the Irish west coast, reportedly at a cost of some €200 million. If the well is dry, every cent is lost. In the same circumstances in Norway, the Norwegian government would refund around €156 million to the partners. This fact is rarely mentioned by those applauding the Norwegian tax system.

Neither do they refer to the fact that Norway allows a write-off of 130 per cent of the capital cost of a development project as against just 100 per cent in Ireland, or that up to this year Norwegian companies were allowed to write off losses incurred anywhere in the world against revenue in Norway, which is not allowed in the Irish system, or that your chances of making a commercial find in Norway are at least five times better than in Ireland.

Secondly, if the Irish system is such a giveaway, why isn’t there a queue for licences? Drilling in Irish waters has been running at one or two wells a year for the last decade, as opposed to perhaps 80 or 90 a year in the North Sea. A recent licensing round in the UK resulted in the award of 167 licences. Our most recent round produced just 13 licensing options. The Irish round before that attracted only two applications, both for the same acreage, so just one licence was awarded. It seems that the oil industry just doesn’t recognise a bargain when it sees one!

We welcome debate, but let it be dispassionate and informed, rather than emotional and ill-informed. – Yours, etc,

FERGUS CAHILL,

Irish Offshore Operators’

Association,

Fitzwilliam Business Centre,

Upper Pembroke Street,

Dublin 2 .