Madam, - Fintan O'Toole's column of August 30th and Brian Ó Catháin's reasoned critique of it (September 1st) have sparked a predictable, if depressing, response.
However, neither Mr O'Toole nor your later correspondents have addressed the salient point raised by Mr Ó Catháin: if the Irish fiscal terms are so incredibly generous, why are companies not beating down the Government's door looking for licences? Why were there only two licences issued under the recent Irish licensing offer, while companies compete vigorously for licences in the UK and Norway? Why has our association seen its membership decline from 16 to eight over the past five years? Why are there no exploration wells being drilled off Ireland this year?
While we ponder these questions, a few facts might be in order.
Ireland is frequently excoriated for having no royalties or State participation, in contrast to the perceived draconian situation in Norway and elsewhere.
Norway, in fact, abandoned royalties for new developments from 1986 onwards. The Norwegian state also pays its share of exploration costs. If Ireland had done the latter, say at 50 per cent, we would literally be in the hole for about €1 billion, with very little to show for it. Imagine the screams of outrage at that! The UK abandoned royalties in 1982, and has no state participation.
In fact, most progressive administrations use taxation as a means of extracting revenue from the offshore petroleum industry, as does Ireland. The rates of taxation inevitably reflect the prospects of success, which in Ireland have unfortunately been very poor to date.
If and when Ireland is established as an attractive area for petroleum exploration (which will be easy enough to determine; there will be lots of applications for licences), then there will be a case for increasing taxation rates. - Yours, etc,
FERGUS CAHILL, Chairman, Irish Offshore Operators' Association, Dublin 6.