€200m State loss if gas project abandoned

THE state will lose at least €200 million if the €1bn Corrib gas field project is abandoned following a controversial Bord Pleanála decision.

Earlier this week, the board refused exploration company Enterprise Energy Ireland (EEI) permission to build a €150m gas treatment plant at Bellanaboy in north Mayo.

EEI is reviewing the entire project and its future is now in doubt.

However, the company, a subsidiary of Shell, has already spent over €190m developing the field.

SIPTU warned yesterday that EEI can write off these expenses against tax, thanks to the country’s generous oil tax laws.

“The way our tax system works, it means these costs can be written off if the company find gas anywhere off the coast during the next 25 years.

“The company loses nothing and the State gets nothing,” SIPTU offshore committee spokesperson Pádraig Campbell said.

The Corrib field, discovered in 1996, could yield up to €21bn worth of natural gas. The Government has also spent hundreds of thousands on a proposed gas line between Bellanaboy and Galway to distribute gas to towns in Mayo and Galway.

The €127m gas line was given the green light by the Department of Marine and Natural Resources prior to the general election last year.

“These are further costs to the public purse that I’m worried about,” Mr Campbell said.

“This gas field should be developed in an environmentally friendly way, but it’s vital that legislation is changed so that the Irish people can benefit,” he said.

Ireland has the lowest oil tax rate in the world at 25%, compared to the 78% levy paid by exploration companies in Norway.

“We’ve 65,000 square kilometres of waters around our coast and this place is viewed by oil companies as the new frontier.

“Unless we change our outdated oil laws soon, we’ll lose everything,” Mr Campbell added.

During the last five years, there have been only five active exploration wells off the coast, compared to 256 in Britain.

Demand for gas here is expected to rise by upwards of 30% during the next three years. At the moment, the only domestic gas supply comes from Kinsale, but this resource is declining. Over 70% of the product is imported.