The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[muppet]

Declan I see that article was written by Simon Carswell.

He wrote the excellent Anglo Republic and he knows his stuff.

There is a story in there somewhere, my guess is somewhere in here:

"The trial of former Anglo directors and executives Seán FitzPatrick, Willie McAteer and Pat Whelan for providing unlawful financial assistance to 16 individuals – 10 long-standing customers of the bank and six members of Seán Quinn's family – to buy shares in the bank is scheduled to begin in January.

Mr Moran liaised with the Financial Regulator and investment bank Morgan Stanley, which was advising Anglo, on the unwinding of Mr Quinn's investment in 2008, a transaction that propped up the share price."

[seafoid]

Muppet

Whenever the crisis is over will you donate the thread to the national archives ?
It's such an interesting record of the mess.

[Declan]

Declan I see that article was written by Simon Carswell.

He wrote the excellent Anglo Republic and he knows his stuff.

He did alright and and it's some read. You'd like to think that Moran has some information that's relevant to the case alright.

[CiKe]

Are investments in Norway still being made or are we talking about legacy investments? What was tax rate when the investments were made? It may not be possible to get new investment by setting a 78% tax rate.

The 78% tax rate has been in for decades I believe. But Norway would get very little investment if it was a 78% tax rate and nothing else. As I mentioned (but muppet left out because it doesn't suit his agenda), Norway will refund you 78% of your loss if you fail to make profits. That was a huge help in encouraging companies to invest, and ended up building a success record that encouraged more and more exploration.

Despite our so called giveaway rates, we really struggle to find companies willing to fund exploration activities, compared to Norway and UK, who find it much easier to give licences out despite higher tax rates.

(The effective tax rate in Norway would be less that 78% in reality as they also give bonus allowances for capital spend).

Your 'agenda' insult is interesting because I find the small number of pro-oil/gas company people I encounter always seems to be quite aggressive on the subject. This is particularly the case when you ask them if they have any connection to the industry in any shape or form.

Anyway, I 'left that out' because I have never heard of it. That doesn't mean it isn't true, but a link might be more convincing than a sneer and no source.

My understanding is the oil companies in Norway pay some of the upfront costs regardless, meaning that whether they succeed or not, it still costs them some money. In Ireland if you strike oil or gas, you don't pay tax until everything is paid off. That means you take our oil or gas, and sell it, paying no tax, until you have paid off all of your own costs.

Finally, the statement that we gave it away free is still true. Paying for the infrastructure is one thing, a tax on profits is another, but they still pay nothing for the actual raw material.

Is that true? Would Initial setup costs not be considered CAPEX and not operating expenses? In which case it wouldn't impact P+L at inception - there would just be change in Balance Sheet and a cash outflow. I would imagine that as soon as they start pumping then they have expenses and revenues and tax would be charged on the profits. Are you telling me that companies In Ireland won't pay tax until all infrastructure costs are recovered? That sounds odd.

[muppet]

CiKe I am searching for where I read that and can't find it. I can find comments referring to such terms, but nothing verifiable.

Without a source, I can't back it up so for the moment it is a case of - I don't know. I will keep looking and post any proper reference to those terms.

[muppet]

http://www.forbes.com/sites/davidmonagan/2012/11/01/black-gold-in-ireland-mindthe-eco-warriors-though/

The Corrib Gas Project is a project that got under way in the late eighties and with the generous terms granted by that twisted hack Ray Burke saw Irelands controlling interest of 50% slashed to 0 % and the corporate tax rate of 25 % with all extraction costs to be deducted from the 25% tax rate , leaving us actual citizens of Ireland sucking hind tittie on the largest gas and oil find in the history of the State. Ireland will be lucky to see 12% out of the between 540 -700 billion euros that the Corrib field is worth. Wheres the cause for celebration here?

http://irishoilandgas.wordpress.com/2013/03/08/corrib/

The above blog quotes a letter to the Irish Times from a former Shell employee, who, while writing in defence of Shell made the following statement:

Because Corrib's 25 per cent corporation tax will be payable only after the project has recovered its (fourfold increased) cost, a process which can begin only when the gas starts to flow (eight years late), the tax take will have been destroyed to the tune of at least 75 per cent on a net present value basis, compared to the original plan.

I am no accountant and don't know for certain if this proves my point in the way I hope it does. Anyone financially qualified able to comment?

[Hound]

In Ireland if you strike oil or gas, you don't pay tax until everything is paid off. That means you take our oil or gas, and sell it, paying no tax, until you have paid off all of your own costs.

Is that true? Would Initial setup costs not be considered CAPEX and not operating expenses? In which case it wouldn't impact P+L at inception - there would just be change in Balance Sheet and a cash outflow. I would imagine that as soon as they start pumping then they have expenses and revenues and tax would be charged on the profits. Are you telling me that companies In Ireland won't pay tax until all infrastructure costs are recovered? That sounds odd.

CiKe, the rules for petroleum companies are different. All their capital expenditure in terms of exploring for offshore oil and gas is allowable in the same way as operating expenses. Bear in mind, this isn't an Irish thing. Irish and UK rules are very similar, and in Norway the deductions are more generous - for every €100k capital expenditure you have, you actually get a tax allowance of €130k.

None of Ireland, UK or Norway charge a royalty for oil/gas extracted. Tax is only charged on profits in all 3 countries (i.e. after all costs incurred are taken into account). Some countries do charge a royalty.

The question is, from a policy standpoint, do we want to attract oil companies to Ireland to invest and explore for oil, or do we want to leave the oil in the ground?

There are numerous reasons why Norway and UK are more attractive to exploration companies (much better record of success, easier planning/regulatory regimes, better infratrcuture thus lower exploration/exploitation costs,  and Norway has the additional advantage that the state effectively underwrites 78% of your costs).

The advantage Ireland currently has is the 25%-40% tax rate compared to UK 62% and Norway's 78%.

But at the moment it hasn't proven successful. In recent licensing rounds, Norway and UK still get far more interest than Ireland, particularly from larger companies.   

[muppet]

In Ireland if you strike oil or gas, you don't pay tax until everything is paid off. That means you take our oil or gas, and sell it, paying no tax, until you have paid off all of your own costs.

Is that true? Would Initial setup costs not be considered CAPEX and not operating expenses? In which case it wouldn't impact P+L at inception - there would just be change in Balance Sheet and a cash outflow. I would imagine that as soon as they start pumping then they have expenses and revenues and tax would be charged on the profits. Are you telling me that companies In Ireland won't pay tax until all infrastructure costs are recovered? That sounds odd.

CiKe, the rules for petroleum companies are different. All their capital expenditure in terms of exploring for offshore oil and gas is allowable in the same way as operating expenses. Bear in mind, this isn't an Irish thing. Irish and UK rules are very similar, and in Norway the deductions are more generous - for every €100k capital expenditure you have, you actually get a tax allowance of €130k.

None of Ireland, UK or Norway charge a royalty for oil/gas extracted. Tax is only charged on profits in all 3 countries (i.e. after all costs incurred are taken into account). Some countries do charge a royalty.

The question is, from a policy standpoint, do we want to attract oil companies to Ireland to invest and explore for oil, or do we want to leave the oil in the ground?

There are numerous reasons why Norway and UK are more attractive to exploration companies (much better record of success, easier planning/regulatory regimes, better infratrcuture thus lower exploration/exploitation costs,  and Norway has the additional advantage that the state effectively underwrites 78% of your costs).

The advantage Ireland currently has is the 25%-40% tax rate compared to UK 62% and Norway's 78%.

But at the moment it hasn't proven successful. In recent licensing rounds, Norway and UK still get far more interest than Ireland, particularly from larger companies.

There is a third possibility. That we do it ourselves, obviously in partnership with someone with expertise, but still controlled by ourselves.

I know the Government has messed things up before (look at the Compulsory Purchases Order which really kicked things off in Mayo and lead to the Rossport 5) but it doesn't mean we couldn't do it right.

[Hound]

There is a third possibility. That we do it ourselves, obviously in partnership with someone with expertise, but still controlled by ourselves.

Yes its an option, but I'm not sure if its realistic.

Drilling a well costs tens of millions. €60M is the broad estimate for an Atlantic exploration well. The stats for Ireland so far is that you have a 1 in 8 chance of making a discovery, and a 1 in 32 chance of making a commercial discovery. Spending 32 x €60M and getting one revenue stream would obviously be a poor scenario.

You would think those stats would improve in the future with advances in technology in terms of both finding reserves and being able to extract it more efficiently. But it would still be a big gamble. Would have been easier to do pre-crash!

I have absolutely no vested interest in oil and gas. But I would welcome oil companies discovering large commercial oil and gas reserves and bringing them onshore, hopefully making large profits after costs and paying the 40% tax and creating a big oil and gas industry on the west coast and turning Killybegs or somewhere else into a Stavanger or an Aberdeen with thousands of jobs created directly and indirectly, and no big outlay required by the exchequer.

[muppet]

There is a third possibility. That we do it ourselves, obviously in partnership with someone with expertise, but still controlled by ourselves.

Yes its an option, but I'm not sure if its realistic.

Drilling a well costs tens of millions. €60M is the broad estimate for an Atlantic exploration well. The stats for Ireland so far is that you have a 1 in 8 chance of making a discovery, and a 1 in 32 chance of making a commercial discovery. Spending 32 x €60M and getting one revenue stream would obviously be a poor scenario.

You would think those stats would improve in the future with advances in technology in terms of both finding reserves and being able to extract it more efficiently. But it would still be a big gamble. Would have been easier to do pre-crash!

I have absolutely no vested interest in oil and gas. But I would welcome oil companies discovering large commercial oil and gas reserves and bringing them onshore, hopefully making large profits after costs and paying the 40% tax and creating a big oil and gas industry on the west coast and turning Killybegs or somewhere else into a Stavanger or an Aberdeen with thousands of jobs created directly and indirectly, and no big outlay required by the exchequer.

So would I.

But currently we have a system that is fraught with legal and social problems, has yielded no income whatsoever for the taxpayer, while for example, Shell made $27 Billion Profit last year and the Chief Executive took home $5 Million. And it is Shell that we are worried about,

[Hound]

There is a third possibility. That we do it ourselves, obviously in partnership with someone with expertise, but still controlled by ourselves.

Yes its an option, but I'm not sure if its realistic.

Drilling a well costs tens of millions. €60M is the broad estimate for an Atlantic exploration well. The stats for Ireland so far is that you have a 1 in 8 chance of making a discovery, and a 1 in 32 chance of making a commercial discovery. Spending 32 x €60M and getting one revenue stream would obviously be a poor scenario.

You would think those stats would improve in the future with advances in technology in terms of both finding reserves and being able to extract it more efficiently. But it would still be a big gamble. Would have been easier to do pre-crash!

I have absolutely no vested interest in oil and gas. But I would welcome oil companies discovering large commercial oil and gas reserves and bringing them onshore, hopefully making large profits after costs and paying the 40% tax and creating a big oil and gas industry on the west coast and turning Killybegs or somewhere else into a Stavanger or an Aberdeen with thousands of jobs created directly and indirectly, and no big outlay required by the exchequer.

So would I.

But currently we have a system that is fraught with legal and social problems, has yielded no income whatsoever for the taxpayer, while for example, Shell made $27 Billion Profit last year and the Chief Executive took home $5 Million. And it is Shell that we are worried about,

Would have been $27.5 billion but for Corrib!

It'll be interesting when Corrib is up and running and producing gas. On the one hand to hopefully show oil and gas companies that it is possible for things to run smoothly and efficiently in Ireland. And on the other hand to show the people that it can bring good employment and increased activity to the west coast.

Of course there's a lot that can still go wrong, like that poor young German who got killed in the tunnel during the week, and then we hear the last guy the Department hired to inspect the tunnelling wasn't allowed into the tunnel because he hadn't got the requisite qualifications (but it was grand because he still inspect it from the outside  )!

[muppet]

There is a third possibility. That we do it ourselves, obviously in partnership with someone with expertise, but still controlled by ourselves.

Yes its an option, but I'm not sure if its realistic.

Drilling a well costs tens of millions. €60M is the broad estimate for an Atlantic exploration well. The stats for Ireland so far is that you have a 1 in 8 chance of making a discovery, and a 1 in 32 chance of making a commercial discovery. Spending 32 x €60M and getting one revenue stream would obviously be a poor scenario.

You would think those stats would improve in the future with advances in technology in terms of both finding reserves and being able to extract it more efficiently. But it would still be a big gamble. Would have been easier to do pre-crash!

I have absolutely no vested interest in oil and gas. But I would welcome oil companies discovering large commercial oil and gas reserves and bringing them onshore, hopefully making large profits after costs and paying the 40% tax and creating a big oil and gas industry on the west coast and turning Killybegs or somewhere else into a Stavanger or an Aberdeen with thousands of jobs created directly and indirectly, and no big outlay required by the exchequer.

So would I.

But currently we have a system that is fraught with legal and social problems, has yielded no income whatsoever for the taxpayer, while for example, Shell made $27 Billion Profit last year and the Chief Executive took home $5 Million. And it is Shell that we are worried about,

Would have been $27.5 billion but for Corrib!

It'll be interesting when Corrib is up and running and producing gas. On the one hand to hopefully show oil and gas companies that it is possible for things to run smoothly and efficiently in Ireland. And on the other hand to show the people that it can bring good employment and increased activity to the west coast.

Of course there's a lot that can still go wrong, like that poor young German who got killed in the tunnel during the week, and then we hear the last guy the Department hired to inspect the tunnelling wasn't allowed into the tunnel because he hadn't got the requisite qualifications (but it was grand because he still inspect it from the outside  )!

Is that true! FFS we have learned nothing regarding regulation.

Regarding Corrib the protestors get most of the blame for the delays, and there may be some of them who deserve such discredit. But Shell and in particular the Government should acknowledge their parts in the mess.

[CiKe]

In Ireland if you strike oil or gas, you don't pay tax until everything is paid off. That means you take our oil or gas, and sell it, paying no tax, until you have paid off all of your own costs.

Is that true? Would Initial setup costs not be considered CAPEX and not operating expenses? In which case it wouldn't impact P+L at inception - there would just be change in Balance Sheet and a cash outflow. I would imagine that as soon as they start pumping then they have expenses and revenues and tax would be charged on the profits. Are you telling me that companies In Ireland won't pay tax until all infrastructure costs are recovered? That sounds odd.

CiKe, the rules for petroleum companies are different. All their capital expenditure in terms of exploring for offshore oil and gas is allowable in the same way as operating expenses. Bear in mind, this isn't an Irish thing. Irish and UK rules are very similar, and in Norway the deductions are more generous - for every €100k capital expenditure you have, you actually get a tax allowance of €130k.

None of Ireland, UK or Norway charge a royalty for oil/gas extracted. Tax is only charged on profits in all 3 countries (i.e. after all costs incurred are taken into account). Some countries do charge a royalty.

The question is, from a policy standpoint, do we want to attract oil companies to Ireland to invest and explore for oil, or do we want to leave the oil in the ground?

There are numerous reasons why Norway and UK are more attractive to exploration companies (much better record of success, easier planning/regulatory regimes, better infratrcuture thus lower exploration/exploitation costs,  and Norway has the additional advantage that the state effectively underwrites 78% of your costs).

The advantage Ireland currently has is the 25%-40% tax rate compared to UK 62% and Norway's 78%.

But at the moment it hasn't proven successful. In recent licensing rounds, Norway and UK still get far more interest than Ireland, particularly from larger companies.

Thanks for clearing up, hadn't realised that.

[muppet]

http://www.bloomberg.com/news/2013-09-23/why-100-000-salary-may-yield-retirement-flipping-burgers.html

[Declan]

Read that article yesterday muppet. Scary stuff. Also read another one related to the sunshine states e.g Arizona etc which have become increasingly popular with retirees and thae unusual sight of all the retail, fast food places etc being staffed by 65+ still trying to survive.

Another casualty of the unregulated financial greed that has devoured the developed world 

Read this one and shiver - http://www.rollingstone.com/politics/news/looting-the-pension-funds-20130926