Exploration licences granted for the South Porcupine Basin

Two European companies have been awarded exploration licences in the south porcupine basin, off the southern coast, by the Minister for Marine and Natural Resources Mr Woods.

Agip, the Italian company, has been awarded a six-block licence, while the French group Elf Exploration has been given a five block licence in the area.

Mr Woods applauded the interest of the two companies but admitted the response to the licensing round had been muted. He said the low oil price over the last year meant it was difficult for companies "to justify applying for new frontier acreage".

Ironically, since the licensing round ended, oil prices have risen because of OPEC's plans to cut back on worldwide production.

From a 22-year low of just below $10 a barrel, prices have now risen to $13.55. Prices could climb to $16 a barrel by the third quarter. However, Mr Woods said, in a statement, there was no certainty the new price levels would be maintained. The exploration will be done by Agip Ireland and Elf Exploration Ireland, who have been exploring in the Irish offshore since the 1970s. Agip already holds interests in three licences covering 16 blocks, while Elf owns three licences in 12 blocks.

Under the new licences, the two companies are obliged to carry out seismic analysis and geological studies. Mr Woods said the south porcupine had "significant potential for both oil and gas discoveries". He said when the licencing round began there was little information on the area but now "a large amount of data has been acquired and interpreted", he said.