Workers Solidarity Movement

It has been revealed that the decade long resistance of the people of Erris to Shell's experimental gas pipeline has now wiped out Shell's projected profits from the project. Brian O’Cathain, the Managing Director of Enterprise Energy Ireland let the cat out of the bag at a debate at the IFI on the 4th December. Instead of the 650 million dollars the project was intended to cost, Shell & partners have now spent over 3 billion dollars.

O’Cathain put what he estimated as a 1,350 million dollar cost over run as being due to "the very long delay" in completing the project, a delay caused by Shell's refusal to treat the objections of the local community seriously and instead trying to use jailing's and force to impose the high pressure experimental gas pipeline regardless of local objections. This cost over run is probably an underestimate, documents filed by Shell with the companies office in November projected a cost of 2.5 billion euro with 1.92 billion having already been spent. That would be the equivalent of almost 3.5 billion dollars meaning that the project now looks like it will cost Shell five times the original amount planned.

Even with the lower estimate O’Cathain makes it very clear in the embedded audio that there will be no profit and because of that the Corrib field will result in NO tax being paid to the Irish state. O’Cathain can be heard saying "they will never make profit .. the project will never go into profit..the impact of that is that Corrib will never pay tax."

Brian O'Cathain: Corrib will never pay tax by IFI_debates

It is with some wonder that Dublin Shell to Sea today noted the apparent ignorance of the presumed new Fine Gael Minister for Energy and Natural Resources Leo Varadkar who last Tuesday defended outgoing Minister Pat Carey’s decision to sign key consents for the last section of the Corrib gas pipeline on his last day in power. In seeking to avoid the obviously suspect nature of this Varadkar wrongly claimed that “The State stands to gain at least 25 per cent of profits from Corrib and the sooner the gas is brought ashore, the sooner that money can be used to fund essential services.”

Reacting today Dublin Shell to Sea spokesperson Caoimhe Kerins said “Leo Varadkar is either misleading the public or else he is clueless. It is important for people to understand that under Ireland’s bizarre licensing terms, the tax revenue from gas and oil fields will be much lower than 25% of its revenue, or even of its real profits.”

“Corrib will probably pay little or no tax, for at least two reasons. Firstly, the licensing terms introduced by Ray Burke and Bertie Ahern mean that the developer can write off 100% of costs incurred over the past 25 years, including the cost of other unsuccessful wells, before declaring profits. Secondly, the disastrous way in which the Government has handled the project, encouraging Shell to force through an experimental inland refinery against the wishes of the local community, has led to enormous delays. This has meant lower profits and thus lower tax revenue.”

While delays to the project have cost Shell almost two billion (2,000 million) the estimated cost of following international best practice and building an offshore platform to process the gas before passing through inhabited areas as demanded by the community would only have cost an estimated 350 million. In short Shell's decision to crush resistance rather than compromise and the decision of the Irish state to deploy hundreds of Gardai, Naval boats and airforce planes to aid them in doing so have resulted in Shell losing 1650 million in profit and a loss to the Irish government if Shell had paid tax on that full figure of over 350 million! And this loss to the Irish state is before the huge cost of repeatedly deploying enormous numbers of Gardai and military to the area is taken into account.

It is alarming if hardly unexpected that the second party of big business seems intent on following the same counter productive path as the government they replace in continuing to impose the project on the community. The lost to the state, which means a loss of funds to health and education is not their primary concern. That concern is keeping Ireland 'safe' for domestic and international capitalism, the wealthy 1%, to make profits unbothered by the little people.

We carry the costs, they make the profits.

Both Shell and Fine Gael know that with an estimated 540 billion plus in Oil & Gas off the Irish coast losing the profit on the Corrib project is well worth it if they can maintain the ability to impose projects on the population and maintain the what is almost the lowest tax regime on Oil & Gas extraction of any country on the planet. For those in the Labour Party who see themselves on the left they will now have to deal with the fact that their party is implementing the Great Oil & Gas Giveaway and crushing opposition to it just as the Green Party did for the Fianna Fail coalition.

The struggle against the Corrib pipeline is about to enter its final phase. Dublin Shell to Sea are hosting an organising meeting on March 12th for people in the Dublin area. If you are disgusted by these revelations and want to do something about them be sure to be at it. 

Read more about the

• Struggle against Shell's experimental gas pipeline
• The February 2011 Irish elections

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A note on the changes in the tax regime prepared by Paul of the Rossport Solidarity Camp for indymedia.ie

Ministers Ray Burke and Bertie Ahern changed Irish law in 1987 & 1992 so that multinational oil companies:

• Own 100% of the oil and gas they find under Irish waters;
• Pay no royalties on it;
• Can write off 100% of their costs against tax, even costs incurred in other countries; 
• Have profits taxed at 25%, compared to an international average of 68% for oil-producing countries; 
• Can export the oil or gas outside Ireland; 
• Can sell to Bord Gais at full market rates.

This was not always the case. The 1975 terms and conditions provided for:

• Up to 50% state ownership of any find
• 8 – 16% royalties payable by the oil companies to the state on production
• 50% corporation tax on profits

The 1975 terms were modelled on Norway’s oil and gas regime. Because of wise management Norway has no national debt, free universal health care, and billions in the bank for its pensioners. A return to such a regime would guarantee that the Irish state benefits from any exploitation of one of its greatest resources.