Comparing Like With Like?
The Irish offshore industry is repeatedly compared to its Norwegian and UK counterparts. More often than not, this comparison focuses on the fiscal terms offered to companies carrying out exploration and development in these countries. This comparison is wholly inappropriate.
Exploration in Norway commenced at about the same time as in Ireland. Since then the Norwegian industry has drilled 1,200 exploration and appraisal wells. The UK industry has drilled 4,211 exploration and appraisal wells and currently has 350 producing oil and gas fields.
At the same time, Ireland has drilled only 155 exploration and appraisal wells and only has three producing gas fields with the fourth, Corrib, under development.
Norway is also seen as particularly attractive for exploration given the large average size of the fields discovered, approximately three times the size of the average in Ireland. Norway’s production to date plus proven reserves is 114 times greater than Ireland’s. UK production to date and proven reserves is 99 times greater than Ireland’s.
These enormous natural advantages enable Norway and the United Kingdom to impose tough fiscal terms on offshore explorers and make any comparison between terms offered in Ireland and the other two countries entirely inappropriate. The attractiveness of Norway and the United Kingdom, despite their relatively onerous fiscal terms, is emphasised by the number of applicationsfor exploration licences. For instance, the 24th Licensing Round (2006) in the UK attracted 147 applications from 121 companies. A comparable round in Ireland resulted in the award of 4 licences.
The appropriate comparison would be with other countries of relatively low prospectivity, such as France, Spain and Portugal, which have similarly low levels of activity to Ireland.
Oil & Gas fields: Ireland, Norway and the United Kingdom
Norway is the third largest exporter of crude oil in the world and currently has 49 producing oil and gas fields with a further five fields under development. Another 13 fields have ceased production. The UK has over 300 producing oil and gas fields with 18 fields under development. Ireland has only three producing gas fields, one gas field under development and no commercial oil discoveries to date. These stark differences make comparisons between Ireland and the other two countries, and the fiscal terms they impose on exploration companies, entirely inappropriate.
Source: UKOOA, the Petroleum Affairs Division and the Norwegian Petroleum Directorate (Faktaheftet om norsk petroleum verksemd for 2005).
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