Oil firms to invest more despite drill ban plan

Oil firms to invest more despite drill ban plan

The majority of Irish-focused oil and gas companies are still planning to invest in their operations here despite the Government’s intention to phase out oil exploration, more details of which are expected to be released in the near future.

Addressing the annual Atlantic Ireland exploration conference in Dublin, minister of state Seán Canney said more detail on the Government’s exploration policy will be forthcoming shortly. He said the Government will act swiftly to provide certainty for all interested parties.

Last month, Taoiseach Leo Varadkar told the UN climate change summit in New York that the Government will act on advice from the independent Climate Change Advisory Council to end oil exploration off the coast.

However, detail has been in short supply and timeframe, what it means for existing exploration licences and how companies might still be able to drill for natural gas while avoiding discovering oil, remain unclear.

The Taoiseach’s message to the UN has also seriously eroded confidence among explorers active in Irish waters.

PwC’s latest annual survey of the sector found that just under 80% now rate the outlook for the Irish oil and gas industry, for the next two years, as unfavourable compared to 22% this time last year.

“The Government’s recent announcement on plans to phase out oil exploration in Irish waters has caused major concern and uncertainty in the industry, though it was noted that exploration for natural gas would continue ... but it is clear that Government needs to take steps to reassure the industry,” said PwC Ireland’s lead partner on oil and gas Ronan MacNioclais.

“It is acknowledged that, as a nation, we need to transition to low carbon fuels as well as renewables, but this will take time,” he said.

Mr Canney said at the Atlantic Ireland conference that gas is an important transition fuel and that a secure gas supply is a priority.

British exploration company Europa Oil and Gas, , which has six licences off the west coast of Ireland, used the conference to announce that it hopes to conduct a site survey of its flagship Inishkea gas prospect, near the Corrib field, next summer, with a view to drilling during 2021.

Farmout talks, with numerous interested parties, are ongoing, the company said. Last month, Europa’s chief executive Hugh Mackay said that he was confident of finalising a development partner for the company’s Irish assets before the end of the year.

PwC’s survey found that 46% of exploration firms are finding it difficult to source development partners for their Irish prospects and that their discontent with the Government and industry regulators — mainly concerning delays over project approvals — has become more pronounced over the past 12 months.

All respondents, up from 16% a year ago, said that they are planning to invest in exploration in Ireland over the next two years and nearly 60% said they were optimistic about reserve levels yet to be discovered in Irish waters.

“To ban drilling for oil seems like a risky approach as it makes Ireland dependent upon continued supplies from other countries, particularly at a time of geopolitical uncertainty, and it would do little to reduce our carbon footprint,” said Mr MacNioclais.

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