Madam, - Fintan O'Toole (Opinion, November 25th) describes the fiscal terms for oil and gas production offshore Ireland as "astonishingly generous" and "extraordinarily alluring".
Unfortunately for Ireland, the oil and gas industry does not share his view.
The Irish Offshore Operators' Association (IOOA) is the representative body for oil and gas companies operating offshore Ireland. In 1996 we had 22 member companies. By 1999, this had dropped to 13. Membership now stands at seven, with the prospect that by the end of the year it may be as low as five.
Over the past year the Minister for Communications, Marine and Natural Resources has invited applications for licences to explore offshore Ireland. It was stated recently that not one application had been received. It is quite possible that, for the first time since exploration began in the late 1960s, not a single exploration well will be drilled in Irish offshore acreage next year.
Hardly what one would have expected if the terms were "astonishingly generous" and "extraordinarily alluring".
Mr O'Toole proposes a value of €20 billion for the Corrib field. The internationally respected consultants Wood McKenzie, in their 2002 review, estimate the recoverable reserves of this field to be one trillion cubic feet of gas. At current gas prices, which are historically high, this values the gross production of the field at some €2 billion, i.e. one tenth of Mr O'Toole's estimate. Deduct from this the very substantial costs of developing and operating the field, of transporting the gas to market and the discounted value of production over the life of the field, and the real situation is put in perspective. - Yours, etc.,
FERGUS CAHILL,
Chairman, Irish Offshore
Operators' Association,
Dartry Road,
Dublin 6