Environmentalists to challenge permit granted to Providence

Environmentalists will next month challenge a permit granted to Providence Resources in a move that could hit the group’s plans to exploit an oil discovery off the south coast.

Providence, led by chief executive Tony O'Reilly junior, and its partner, Chinese group Apec, are preparing to drill in the Barryroe prospect south of Kinsale Head in Cork, worth an estimated €1.1 billion to the Irish oil and gas explorer.

However, environmental group An Taisce wants the High Court to review a decision by the Department of Communications, Climate Action and Environment to allow Providence subsidiary, Exola, which holds the licence for Barryroe, to survey the area.

The case came before the court this week and Mr Justice Séamus Noonan adjourned the issue to December 11th.

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An Taisce says that the department failed to comply with several EU directives governing environmental impact assessments and habitats when it granted the permit to survey Barryroe.

If An Taisce’s claim succeeds, it could potentially delay Exola’s plans to survey Barryroe, which could hold almost 350 million barrels of crude, and is currently the only Providence prospect known to have commercial quantities of oil.

However, Providence pointed out yesterday that An Taisce’s High Court action does not affect the legal standing of the oil and gas exploration licence granted to Exola.

“As Providence is not the subject of the legal proceedings, it cannot comment further,” the group added.

Oil prices

Providence and Apec hope to begin drilling in Barryroe in the second quarter of this year. Exola is due to survey the block ahead of that and has lined up a vessel for this work.

Drilling will be a key stage in bringing the field to production. It will finally establish how much oil it holds – this is judged to be 346 million barrels – and assess what other parts of the same block may hold.

Providence sold 50 per cent of Barryroe to Apec in March in a deal designed to bring the well into production.

Apec will pay half the drilling costs and the balance to Providence as well as supplying the rig to do the work.

In return, Apec will take a share of Providence’s proceeds until the debt is repaid, after which, the pair will split revenues 50/50.

A slump in oil prices hit shares in most of the industry's listed companies on Friday. Providence stock sank 3.3 per cent to 16 cent on the Irish Stock Exchange.