After decades of being told that Ireland has no natural resources, years of digging and after some 215 barron holes, in March of this year Ireland's first commercial oil well was discovered by Providence Resources off the Cork coast. Initial estimates stated that the Barryroe oil well contained between 373 and 893 million barrels of oil. However today Providence has stated that the oil field may contain up to 1.6 billion barrels of oil, four times the original estimate!
We are rich, rich I tell you, rich beyond our wildest dreams! Not quite. Given that all previous attempts to find oil off the Irish coast have been fruitless the Irish government, in an attempt to attract exploration and investment has had to set a relatively low tax levy of 25% on profits companies make from oil and gas found in Irish territories. For the same reason the state does not receive Royalties from oil and gas discoveries.
Joe.ie reports that even with the low tax levies and lack of royalties, the State could benefit to the tune of a whopping €100 billion. Others stress that significant losses on Providence's books will be written off against profits made on the Barryroe oil well hugely reducing the benefit to the Irish exchequer.
Even if the latter is correct, not all is lost. It is likely that the Government will increase the 25% tax and introduce royalties in order to benefit from further discoveries but not to an extent that will scare off future investment, exploration and drilling.
But is there more oil and gas and if so why has it not been found previously? Well it is generally accepted that the twenty fist centuary has shown enormous advancements in technology. If it is there they will find it. But is it there? David Horgan MD of Petrel Resources plc certainly think so.
"The oil world has been transformed in recent years: despite fluctuations, the oil price remains high. Ireland’s fiscal terms are competitive and legal title is secure.
"Technology has leaped ahead on several fronts, reducing costs and risks. The combination of three dimensional seismic surveys and directional drilling allow explorers to map and drain complex reservoirs.
"The planned development of the 1981 Ballyroe discovery, after a dramatic increase in reserves, shows what is now possible. We believe that the Irish offshore will be increasingly attractive to investors."
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