Exploration licences - Striking the right balance on oil and gas

EVEN in the best of times, the prospect of discovering a pot of gold at the end of a rainbow can excite and distract.

It may even cloud the judgement of normally rational and sober people. In desperate times, it can be far more divisive and fraught.

The debate about how we might utilise the 6.5 billion barrels of oil and 20 trillion cubic feet of gas the Department of Communications, Energy and Natural Resources estimates lie off our western seaboard has been animated and sometimes worrying.

The stakes are very high because if these figures are accurate then enough fuel to sustain Ireland for a century awaits exploitation.

Billions are involved and, at this stage, it is almost impossible to strike a balance between the unrealised ambitions of the exploration companies and the expectations, founded on nothing more than estimates, of those demanding a larger proportion of any revenues for the state.

In a society where institutions, commercial and religious, so abused the trust placed in them, this conflict is to be expected.

The terrible failures in financial regulation in the recent past only add to that feeling that we are unable — or unwilling — to properly supervise big business.

There is a huge deficit of trust and a strong suspicion that we are not equipped to secure the best possible terms.

That all of our data is based on figures supplied by exploration companies does nothing to ease that reticence.

We have been told that the terms Ireland offers exploration companies are very generous by international standards and that we should demand much more.

Energy minister Pat Rabbitte, adopting a position very similar to those he challenged while in opposition, argued that companies had to be encouraged to explore Irish waters and unless terms were attractive, they could not be enticed to do so.

All of these arguments were rendered academic yesterday when Mr Rabbitte awarded 13 licensing options, allowing 12 firms to search for oil and gas in Ireland’s Atlantic waters, which cover more than 250,000sq km of the Atlantic shelf, an area about three times the size of this island.

Mr Rabbitte, as he had earlier indicated he would, announced his decision even though the Oireachtas review of terms offered to exploration companies has not been completed.

Unless the terms include a very strong review clause, this decision may prove hasty and very unsatisfactory.

There is, however, an undeniable air or realism around Mr Rabbitte’s assertion that “Ireland must continue to communicate the message to international exploration companies that Ireland is open for business and that the Irish offshore has real potential”.

Of course we must, but that does not mean we cannot put measures in place that will encourage exploration, the profitable extraction of any resources discovered and a good return to the state.

Mr Rabbitte and the rest of the Government are obliged to ensure that that is the case. Unfortunately, they have considerable work to do before that point is reached.