Exploration company suggests Irish oil and gas sector 'losing momentum'

Exploration company suggests Irish oil and gas sector 'losing momentum'
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The chief executive of one of the most active exploration companies in Irish waters has suggested that Ireland's offshore oil and gas sector may be losing momentum on the back of a slowdown in regulatory approval processes and knocked confidence due to opposition parties attempting to force a ban on offshore drilling.

However, Hugh Mackay of Europa Oil and Gas said he remains confident of finalising a development partner for the company's Irish assets before the end of this year.

The British explorer is sitting on approximately five billion barrels of oil and 2.5 trillion cubic feet of gas in six offshore licences dotted off the west coast of Ireland.

However, Europa has had an application for site survey work - key work before any potential drilling activity - for three of its prospects, including its flagship Inishkea asset near the Corrib field, in the Government's in-tray for most of this year and is still awaiting approval.

"Getting approval is taking a long time. It's possible that the industry is losing momentum," Mr Mackay said.

Last week rival Irish-focused explorer Providence Resources told shareholders that it has relinquished one of its highly-rated prospects off the west coast due to dwindling sentiment towards the Irish offshore amongst potential international development partners.

At the start of this year, Europa said that it had tentatively agreed a deal that would see an unnamed major international oil and gas company invest in the bulk of its Irish offshore licences and enable drilling activity to get underway next year.

Mr Mackay said that deal remains in the pipeline, but is still awaiting the anonymous suitor making a final investment decision.

He said he remains positive of getting a farm-out deal secured before the end of this year, adding that there remains interest from other players in investing in the assets, despite the suggested loss of momentum.

Mr Mackay said that pending a successful farm-out deal and regulatory approvals, site survey work at the Inishkea prospect could conceivably be completed by next summer, potentially paving the way for drilling activity before the end of 2020 or in early 2021.

Europa has said Inishkea could significantly reduce Ireland's reliance on gas imports after the Corrib field comes to the end of its life in little over a decade.

I think gas will continue to play an important part of Ireland's energy mix. The UK is a net importer [of gas], European gas is in decline and will be gone by 2050.

"You don't want to be reliant on importing gas from Russia or Algeria. Having one's own indigenous gas supply would be immensely helpful," Mr Mackay said.

Earlier this week, Europa was awarded a 75% share of an offshore prospect in Morocco and said it was looking at growing an international presence. To date, its main focus has been on Irish waters, with a secondary interest in a small number of UK assets.

Mr Mackay said international expansion plans have nothing to do with a suggested slowdown of progress in Ireland. Europa is also keen on more appraisal projects rather than pure exploration work.

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