THE Corrib gas field is worth €9.5 billion at today’s prices, almost five times its €2bn value, after it was declared commercial in 2001.
This is good news for the cash-strapped government which is set to net €1.7 billion in taxes during the life-time of the field.
The tax windfall is based on operational cots of €3bn being deducted from the total value of the field and a 25% corporate tax charge on the profits.
Details of the worth of the field and its tax benefits have been produced by Minister for Communications, Energy and Natural Resources Eamonn Ryan in response to a Dáil question by Fine Gael TD Michael Ring.
“Based on an assumption that the combined development and production costs will be close to €3 billion, then the tax revenue from the Corrib field would be in the order of €1.7 billion,” Mr Ryan said.
In 2001, the 800-900 million cubic feet of gas in the Corrib field was estimated to be worth €2bn, substantially less than the value today.
It was initially identified in 1992 by Enterprise Energy Ireland, owned by the independent British-based Enterprise Oil.
The first exploration well was drilled in 1996 confirming the presence of natural gas.
The gas field discovery was successfully appraised in 1998 with significant reserves confirmed the following year. Declared commercial in 2001 it was subsequently bought by Shell in April 2002 for €7bn.
The canceling of the offshore pipeline this autumn will delay the arrival of gas onshore by at least two years and it is reckoned the gas will not start to come ashore until sometime in 2010.
At full production, the field is expected to supply about half of the country’s gas needs.
For years Ireland has been sourcing up to 85% of its gas needs on the international market, with just 15% of its gas supplied from local reserves including the Kinsale Head field.
The Corrib field is the second largest found off Irish waters, the largest being Kinsale which was discovered in 1971.
For the first four to five years of its life-span Corrib has the potential to supply 50% to 60% of Ireland’s needs, a percentage that will trail off over the life of the field estimated at 10 to 15 years.
It remains to be seen what impact, if any, the new supply will have on the cost of gas which has soared in price since the discovery was first made.
While the discovery eases supply concerns, Bord Gáis, which will be a major customer for the gas reserve, said that the new Irish reserves would not necessarily result in lower gas prices.
Corrib gas filed prices will be linked to British wholesale prices, because of the integrated nature of the two markets, it has pointed out.
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