Eni lauds Ireland's fiscal terms but set to sell offshore portfolio

ITALIAN ENERGY major Eni has moved to sell its Irish offshore portfolio, while describing Ireland’s fiscal terms as “exceptionally favourable”.

Eni’s holdings cover operating and non-operating stakes in four deepwater licences in the Rockall, Slyne and Porcupine basins.

The company has declined to comment on a recent report of its withdrawal in the Upstreamtrade journal.

However, Eni company sources have described Ireland’s fiscal terms as “exceptionally favourable” with no royalties, no State participation, no production levies, exploration costs which could be fully written off in the first year, and a 25 per cent corporation tax.

Last week Minister for Energy Pat Rabbitte confirmed the new Atlantic margin licensing round had attracted 15 applications – the largest ever for such a round in Irish waters.

Providence has applied with a new entrant as co-venturer. It is believed that companies holding west of Shetland/UK Atlantic Margin positions off Britain, such as Dong and Valiant, and perhaps Total, may also have tendered to expand their reach into Ireland.

The Irish Offshore Operators’ Association had expressed optimism about the new round which will allow successful companies the first refusal on exploration licences over 250,000sq km of the Atlantic shelf, an area about three times the size of the island of Ireland.

The new £2 billion windfall tax on oil and gas production introduced by British chancellor George Osborne may benefit Ireland, IOOA chairman Fergus Cahill told The Irish Times. There had been a "backlash" among major energy companies over Britain's move, aimed at cutting motorists' fuel duties. Mr Cahill welcomed the fact there had been so much interest in this round, initiated by former junior energy minister Conor Lenihan. It is expected the Department of Energy's petroleum affairs division will make a decision on the applications – some of which may be competing for the same block – within several months to allow companies to plan for next year's season.

Colum Stapleton of Gazillion lodged an application on behalf of the Irish people for five blocks, on the Rockall and Erris basins and the western Porcupine, but said confusion over the closing date advertised by the department on its website may have affected his bid. The department said the closing date was noon on May 31st.

Mr Stapleton, a film-maker based in Sligo, admitted that its application was a “greenhorn endeavour”, but aimed to serve as a “catalyst” for capacity building and raising awareness about national energy security.

The Gazillion project had engaged the services of two Australian experts, surveyor Tim Coates and senior hydrographic surveyor Michael Golowyn, as it had been unable to enlist the support of any Irish geophysicists, geologists or seismic experts, Mr Stapleton said.

A 2006 study for the department, published in 2007, estimated a total reserve potential of ten billion barrels of oil equivalent for offshore frontier basins west of Ireland – worth €750 billion at current prices of €75 a barrel.

Mr Rabbitte said last week the Corrib gas field must be brought to full production for strategic reasons, when he outlined his energy policy at an Energy Ireland conference in Dublin.

He recently agreed to a proposal by Fianna Fáil energy spokesman Éamon Ó Cuív to refer the licensing terms for review by an Oireachtas committee. The licensing terms were last changed by former energy minister Eamon Ryan to allow for a return of up to 40 per cent on large finds, but for those registered after 2007 only.