Ireland now has the exciting prospect of developing an oil industry! Providence Resources has recently upgraded its findings on the Barryroe oil field off the Cork coast to 280 million barrels of oil; an announcement which marks the beginning of the Irish oil industry. Despite the recent discovery of large reserves of natural gas in the Corrib field, drilling off Ireland has been rare; according to Fergus O’Dowd, Irelands Natural Resources Minister, only 157 wells have ever been sunk in Ireland, compared to over 4,000 in the United Kingdom. Despite the fact that the newly discovered field is at 100 metres depth, the first delivery of oil is expected in July 2013. The locations of major finds of Ireland are shown in the map attached to this link. Shares in Providence Resources have tripled in value this year to £6.35 ($9.35) and the company is seeking a partner to exploit the field. ExxonMobil are known to be interested in a partnership arrangement.
The discovery comes at a very opportune time, just after the property bust forced the country to seek an €67.5 billion bailout from the European Union and the International Monetary Fund. If the Irish oil fields are anywhere near as large and productive as the United Kingdom fields, then government collections of over €500 billion are realistically possible; more than enough to wipe out the debt and revive the Celtic tiger.
Whether the Irish people really will benefit to that extent has already been doubted, particularly by Michael Burke, writing in The Guardian. Pointing to the long history of pillage of Ireland’s natural resources by Britain, he comments that even Irish politicians have continued the practice. Fianna Fáil’s disgraced former energy Minister Ray Burke granted very favourable exploration licences to oil companies. Shell will pay the Irish government (and hence the Irish people) no royalties at all for the natural gas in the Corrib field, unless calls to the Fine Gael/Labour coalition to change the terms of the original deal are heeded. Providence Resources pays some tax, but at very low tax rates, so that the chances of the Irish government emulating the British experience seems unlikely.
There is a precedent for sustainable growth from the development of national oil fields; Venezuela under Hugo Chávez. Venezuela had huge oil reserves for decades but remained a desperately poor country until the Chávez government seized control of the oil industry from foreign multinationals and redistributed the wealth to the nation. Unlike Ireland, poverty in Venezuela is declining, healthcare and education is improving and the economy is growing. If the Irish people are to be pulled out of their present crisis by an oil boom, their politicians need to consider the Chávez experience and emulate his model.
Felicity Allen, Deputy Editor, Tinteán