He is right in saying that our oil and gas resources could eliminate the national debt and then some – but first we must reclaim what corrupt politicians have given away. Under the current terms and conditions for oil and gas exploration and production:
* There is zero state participation in any oil or gas find and no discount state buying.
* The oil companies pay zero royalties to the state on oil and gas production.
* There is a 100% tax write off on exploration, production & decommissioning costs.
* There are 25% – 40% corporation tax on any remaining profit.
In contrast, the Bolivian state takes 82% of revenues from oil and gas via royalties and taxes. To illustrate the point take the situation in Mayo. The licensees of the Corrib gas field are Shell, Statoil and Vermillion.
As Statoil is still two-thirds owned by the Norwegian state, the people of Norway stand to directly benefit from Corrib gas while there is absolutely no economic benefit guaranteed to the people of Ireland, save the crumbs from the table – a few temporary construction jobs, now also drying up. Under these terms and conditions there is no security of supply. The oil companies will sell at full international market prices, not necessarily to Ireland.
All over the world countries are successfully rewriting the rules governing oil and gas production guaranteeing the state takes its fair share, and in a world of declining oil reserves the oil companies have to grin and bear it. The legislation allows Minister Ryan redraw the deal – we need the revenue more than the wealthy shareholders of the oil companies.
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