IRELAND'S OIL

The Irish Republic may be close to securing oil revenue that could run into billions of euros, something that could, if wisely spent or saved help to reduce the financial consequences of the recent banking crisis. An Irish and UK company, Providence Resources Plc, says its Barryroe site, some 30 miles off the Cork coast, should yield around 280 million barrels of oil. Any Oil revenues generated will be dependent on the price of oil when its extracted and on licensing arrangements between the Oil companies and the Irish Government.

Providence Resources Plc rig at Barryroe, Ireland (Finbarr O'Rourke/Providence Reso/PA)

When production comes on line this could mark the beginnings of the Irish oil industry. Oil companies have spent decades of exploring around the Irish coast and off-shore. Providence Resources Plc plans to use multi-national energy giants to work within its licence, which the company secured from the Irish government for a nominal fee. The company has already secured the expertise of the world's leading oil multi-national, Exxon Mobil, to explore its site at Drumquin.

In Ireland, campaigners have been calling for Ireland's relaxed laws with relation to its natural resources to be overhauled and upgraded. At the moment Ireland gets around 25% of all profits, rising to 40% depending on the volume of oil and gas extracted. This tax take is significantly lower than it is in Norway and the UK, both of whom have much larger oil and gas resources. At the moment a barrel of oil comes in at about $110, €85 or £69, even 25% of the revenue should prove a huge boon for a country that has never successfully extracted a drop of oil before.

The Irish Government argues that the low rate is attractive to foreign companies as Ireland does not have the expertise or revenue to exploit any oil and gas reserves itself. Critics in Ireland point out that all exploration costs can be off-set against any tax liable ones, and that claims can go back as far as 25 years.  Providence Resources Plc, who are believed to have spent around £0.5 billion pounds exploring Irish waters, has divested itself of any UK onshore assets (28th September 2012) so they can focus their resources on bringing on-stream its drilling programme off the Irish coast.

Some campaigners in Ireland have warned that the oil from Barryroe may never even be landed in Ireland, but taken to refined in Europe or elsewhere, something that will mean fewer jobs on Irish soil. The Irish Green Party has reservations about just exactly how much oil and gas is actually there, as the quoted oil resource figures have not yet been tested. The RSPB (in Northern Ireland) is also concerned about potential oil and gas extraction from around Rathlin Island, off the County Antrim coast, which is a Special Area of Conservation and a Special Protection Area (SPA).

Meanwhile Providence Resources Plc says its aims to bring any oil from Barryroe to Cork, but that any decision will be made on a commercial basis closer to the time of extraction. For Irish politicians (and the media) though the prospects of even some 25% of the revenue from what may potentially been billions of euros worth of oil will be a significant boost to the country in the aftermath of the banking crisis.

One significant advantage that Ireland by being independent has over Wales is the fact that a significant percentage any oil and revenues generated will flow into Irish coffers rather than into the bottomless pit that passes itself off as the UK Treasury.  Scotland by virtue of having a parliament (with significant influence over Scottish finances) will also (unlike Wales) get a significant portion of any oil and revenues generated rather than simply sit and watch it get siphoned off into the UK Treasury.