Offshore drilling firms warn of potential cuts

Oil and gas companies have warned that exploration drilling in Irish waters may be "significantly reduced" unless commercial discoveries with potential are made in the near future.

The current success ratio is less than one-fifth of international norms, the Irish Offshore Operators' Association has said in a report presented to the Minister for the Marine and Natural Resources, Dr Woods.

The study estimates that total expenditure by the oil and gas industry since 1970 on exploration and appraisal was £642.5 million (€815.8 million) - equivalent to £1.375 billion in 1998 terms - with only Kinsale yielding confirmed commercial results. Direct expenditure in Ireland was £392.3 million, rising to £976.8 million when indirect impact is allowed for (both figures in 1998 terms).

The average annual employment offshore was some 60 full-time equivalent jobs, with total average annual employment being equivalent to 247 full-time jobs.

Between 1960 and 1999, the Government received £129.88 million in licensing fees and royalties, the study states. It also highlights benefits such as the development of a natural gas industry, which might not have occurred if the resource had not become available.

The study says Irish goods and services must "remain at an international level of competence", and competitive prices must be offered within EU trade and competition requirements, if the industry is to be competitive in the domestic market.

It recommends that educational opportunities be constantly assessed to ensure that there is a suitably qualified labour force, and says the authorities must encourage an open and effective flow of information between the companies and agencies such as the Department of the Marine and Natural Resources and Enterprise Ireland. This information includes contract specifications, tender programmes and employment opportunities.

It also suggests the industry and State should work together to review the use of Irish resources and services, and propose measures to "reinforce the competitiveness of Irish suppliers" - that is, cut costs.