Shell to Sea

[Hardy]

All this shows is a poorly managed and planned project will still lose money even if it seems impossible to do so. This project was clearly flawed from the start and that has undoubtedly caused huge losses that were very avoidable. How come Shell only have a 45% stake in the Corrib Field to sell though? I think these backs of an envelope calculations of profit and loss might not be entirely telling the full story.

Sorry Hardy but to say government policy has been vindicated because of this article is simply a ridiculous comment. Statoil are happy enough to remain involved. So are the Canadian buyers of this stake. Someone's making money and it isn't our government (well the Gardaí and the contractors they protected made shit loads of cash as well).

OK, to call this one example a vindication might be a bit strong, but there's absolutely no doubt that it would be lunatic for the state to embark on speculative exploration. And the taxi-driver analysis we hear all the time about taxing the arse out of companies who might be interested in exploring our waters for resources is ludicrous. The proof of that is very simple - if we're giving the oil and gas companies a bonanza with cut price access to our teeming resources, where are they all?

No government can get away with taxing losses. And exploration is loss-making until the oil/gas starts to flow. We tax the arse out of them when there's something to tax. IF there's something to tax. When they've spent THEIR money, not ours to find out if there's anything there.

In the meantime, we give them tax incentives to take the risk of exploring, so that we don't have to bear the cost ourselves. That's exactly the right policy. That's how Norway did it and today I think the Norwegian exchequer gets 70% of every oil dollar.

We could make the taxi drivers happy and never get the chance to exploit whatever wealth might be there. It would be economic nonsense, but we'd be able to say proudly that we never gave tax incentives to fat cat oil companies.

Ireland offers the second most generous terms of any nation

You don't get the point, do you?

[macdanger2]

I get your point and it's reasonably well made except for one completely inaccurate statement

We tax the arse out of them when there's something to tax.

That's complete bollix

[Hardy]

I get your point and it's reasonably well made except for one completely inaccurate statement

We tax the arse out of them when there's something to tax.

That's complete bollix

Elaborate

[macdanger2]

The statement that we tax the arse out of them is bollix. See my previous post about the generosity of the terms we offer

[Hardy]

The statement that we tax the arse out of them is bollix. See my previous post about the generosity of the terms we offer

Where are all the oil and gas companies, who surely must be jumping over each other to avail of this generosity?

[macdanger2]

So do you agree that we don't actually tax the arse out of them?

[Hardy]

My question was first. But the fact that you can ask a question like that having read what I've posted doesn't make me expect a reasonable answer.

[stephenite]

All this shows is a poorly managed and planned project will still lose money even if it seems impossible to do so. This project was clearly flawed from the start and that has undoubtedly caused huge losses that were very avoidable. How come Shell only have a 45% stake in the Corrib Field to sell though? I think these backs of an envelope calculations of profit and loss might not be entirely telling the full story.

Sorry Hardy but to say government policy has been vindicated because of this article is simply a ridiculous comment. Statoil are happy enough to remain involved. So are the Canadian buyers of this stake. Someone's making money and it isn't our government (well the Gardaí and the contractors they protected made shit loads of cash as well).

OK, to call this one example a vindication might be a bit strong, but there's absolutely no doubt that it would be lunatic for the state to embark on speculative exploration. And the taxi-driver analysis we hear all the time about taxing the arse out of companies who might be interested in exploring our waters for resources is ludicrous. The proof of that is very simple - if we're giving the oil and gas companies a bonanza with cut price access to our teeming resources, where are they all?

No government can get away with taxing losses. And exploration is loss-making until the oil/gas starts to flow. We tax the arse out of them when there's something to tax. IF there's something to tax. When they've spent THEIR money, not ours to find out if there's anything there.

In the meantime, we give them tax incentives to take the risk of exploring, so that we don't have to bear the cost ourselves. That's exactly the right policy. That's how Norway did it and today I think the Norwegian exchequer gets 70% of every oil dollar.

We could make the taxi drivers happy and never get the chance to exploit whatever wealth might be there. It would be economic nonsense, but we'd be able to say proudly that we never gave tax incentives to fat cat oil companies.

Ireland offers the second most generous terms of any nation

Have you considered why?

[omaghjoe]

I get your point and it's reasonably well made except for one completely inaccurate statement

We tax the arse out of them when there's something to tax.

That's complete bollix

Elaborate

Id have thought you should be elaborating since it is your statement

[macdanger2]

My question was first. But the fact that you can ask a question like that having read what I've posted doesn't make me expect a reasonable answer.

Your question about why the oil & gas companies aren't coming is an entirely different question to what we were discussing. Let's just recap:

You said "we tax the arse out of them when there's something to tax"
I pointed out that we have the 2nd most generous terms in the world

So are you standing by your original statement?

If you want to discuss if /why exploration companies are /aren't coming, I'd be happy to do so

[Hardy]

Look, which part of "we tax the arse out of them when there's something to tax" do you not understand?

Read carefully:
We don't impose a punitive tax regime on exploration - i.e when there's nothing to tax only losses. We apply the maximum amount of tax we can, not now, but at some future time IF, then WHEN the exploration has found resources worth exploiting. We incentivise exploration or it won't happen. We apply a Norway-style 70%, feckit 90% tax if we can get away with it, when the oil is flowing, which will never happen if the exploration doesn't happen. And which will never happen if the exploration finds nothing. Clear?

So, back to my question - why are all the oil and gas companies ignoring our supposed handout bonanza, but still exploring off Norway, 70% tax and all?

[macdanger2]

Look, which part of "we tax the arse out of them when there's something to tax" do you not understand?

Read carefully:
We don't impose a punitive tax regime on exploration - i.e when there's nothing to tax only losses. We apply the maximum amount of tax we can, not now, but at some future time IF, then WHEN the exploration has found resources worth exploiting. We incentivise exploration or it won't happen. We apply a Norway-style 70%, feckit 90% tax if we can get away with it, when the oil is flowing, which will never happen if the exploration doesn't happen. And which will never happen if the exploration finds nothing. Clear?

So, back to my question - why are all the oil and gas companies ignoring our supposed handout bonanza, but still exploring off Norway, 70% tax and all?

We may have crossed wires here Hardy - if I'm reading this post correctly you're talking about what we SHOULD do in terms of taxation rather than what we currently are doing?

[Hardy]

Now yer suckin' diesel crude oil!

[macdanger2]

Right, fair enough so, I'd be reasonably happy with something like that. I'd be somewhat worried that by the time we reach "proof of concept", it'll turn out that all the exploration licenses are signed at the lower rate and there's nothing left to tax. I'd be in favour of some sort of cap being inserted into contracts to prevent that from happening.

I also think that the exploration companies should be required to give copies of geological surveys to the govt so that we'd know as much about what's down there as they do

[magpie seanie]

Right, fair enough so, I'd be reasonably happy with something like that. I'd be somewhat worried that by the time we reach "proof of concept", it'll turn out that all the exploration licenses are signed at the lower rate and there's nothing left to tax. I'd be in favour of some sort of cap being inserted into contracts to prevent that from happening.

I also think that the exploration companies should be required to give copies of geological surveys to the govt so that we'd know as much about what's down there as they do

There was a Dept of Finance report a couple of years ago that confirmed this would not be the case/is not the case. We could up the royalties/tax rates in the morning on the oil/gas that is being pumped today. And we should.