Macquarie may buy out Shell's Corrib gas stake - will the bad press linger ?

cyberianpan

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Per the Sunday Times
https://twitter.com/FrankSunTimes/status/805163859195600896
ST BIZ: Australian investment giant Macquarie could be prepared to pay as much as €1.2bn to Shell for its 45% stake in Corrib project
Of course Colin Hunt who - since August 2016 is now head of AIB Wholesale & Institutional Banking was head of Macquarie Capital Ireland for the ~9 years previous

Colin is strong Fianna Fáil, initially a SPAD to Martin Cullen,then to Brian Cowen
https://www.linkedin.com/in/colin-hunt-357b7bb

Shell have attracted unfair bad press re Corrib - our protesty people love protests ... will the protesty people make Macquarie a target ?

cyp
 


Lumpy Talbot

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No
Shell and BP have tanked in terms of their balance sheets in recent years because of the oil price collapse. They are slowly recovering but they are very vulnerable in terms of the dollar-per-barrel need they have to be a lot higher than it has been.

Both companies have been contracting sharply and shedding assets, cutting workforce etc.

Of course it isn't really relevant at the moment who owns the Corrib investment but it would become relevant bloody quickly if oil prices per barrel went north again and there was a discovery of significance in the blocks Maquarie might own.

At which point the spectacularly infamous giveaway of rights by some hugely incompetent or bent Irish politicians as hapless or corrupt as the average Niger delta chieftain years ago will come back to haunt the state.

A fianna fail business connection with Corrib wouldn't bode well in terms of any improvement in transparency around that ugly corporate mess in the west of Ireland either.

It is the opposite of 'alpha'. It is possible despite intense competition down the years from South America and Africa that Irish politicians may have discovered a way to lose public money and confidence in any deals around that sector simultaneously and have at the same time guaranteed that the news on that would emerge shortly after any prospective discovery.
 

firefly123

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Shell and BP have tanked in terms of their balance sheets in recent years because of the oil price collapse. They are slowly recovering but they are very vulnerable in terms of the dollar-per-barrel need they have to be a lot higher than it has been.

Both companies have been contracting sharply and shedding assets, cutting workforce etc.

Of course it isn't really relevant at the moment who owns the Corrib investment but it would become relevant bloody quickly if oil prices per barrel went north again and there was a discovery of significance in the blocks Maquarie might own.

At which point the spectacularly infamous giveaway of rights by some hugely incompetent or bent Irish politicians as hapless or corrupt as the average Niger delta chieftain years ago will come back to haunt the state.

A fianna fail business connection with Corrib wouldn't bode well in terms of any improvement in transparency around that ugly corporate mess in the west of Ireland either.

It is the opposite of 'alpha'. It is possible despite intense competition down the years from South America and Africa that Irish politicians may have discovered a way to lose public money and confidence in any deals around that sector simultaneously and have at the same time guaranteed that the news on that would emerge shortly after any prospective discovery.
This giveaway you speak of. You do realise the licenses are for a finite period of time and so far pretty much every company that has invested in them has not turned any profit whatsoever.
 

wombat

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Despite all the wishful thinking, the Corrib gas field is not a major resource for a company of Shell's size. There is a surplus of natural gas at present so there is an incentive for Shell to sell to a smaller company and use the capital elsewhere.
 

Lumpy Talbot

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This giveaway you speak of. You do realise the licenses are for a finite period of time and so far pretty much every company that has invested in them has not turned any profit whatsoever.
By the nature of the business exploration is mothballed when the price per barrel is low on the world markets and then picks up again when it becomes economically viable to spend to explore.

At this time it seems not to matter what the deal is with oil companies when they are sinking an occasional test well. But the sort of deals the state has offered oil exploration outfits in Ireland would leave the state with nothing if a discovery was made. Companies at the moment can defer taxation indefinitely on anything they do find and are effectively putting the cost of exploration on the state's tab anyway via the ability to claim tax breaks against such costs.

If any profit does appear then the state has signed deals which would leave them with a nominal amount per barrel AFTER the company involved has deducted all the costs possible from the gross price per barrel.

You can guess how much net would be left after the oil company accountants would have been at the gross price barrel. If the state has signed any deal at all for a share off the net the state has been hideously incompetent in opening up that situation. By all means encourage exploration and discovery but there is no excuse whatsoever for the state setting itself up to earn the square root of sod all off the net price per barrel.

It is the old boxing promotor's trick. Get a deal worth millions for the boxer in gross terms but then retain the contractual small print ability to decide what gets charged to the boxer for training camp costs, advertising and promotion et cetera so in the end the promoter gets the bulk of the purse and the dazed boxer is left holding a much smaller cheque calculated off the net.
 

Roberto Jordan

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This giveaway you speak of. You do realise the licenses are for a finite period of time and so far pretty much every company that has invested in them has not turned any profit whatsoever.
Shush now with your facts and history of natural resource exploitation in Ireland and its waters.

Dont you know that all those oil & gas companies are secretly sitting on reserves in dear old Ireland while they work in real easy places to operate like Putin's siberia and the peaceful middle east?

Next you'll be telling us that the most environmentally damaging and least fiscally productive instance of fossil fuel production in Ireland was that time the state didnt license someone else to do it and decided it was going to eviscerate the bog of allen to give jobs to lads.
 

Orbit v2

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Despite all the wishful thinking, the Corrib gas field is not a major resource for a company of Shell's size. There is a surplus of natural gas at present so there is an incentive for Shell to sell to a smaller company and use the capital elsewhere.
The Shell to Sea crowd reckoned that Corrib was worth €8 billion*. It's just as well then, the Irish state isn't the ones selling 45% of the field for €1.2 billion. Imagine the shrieking and squawking about sellouts then...

It was the right move for the state to stay out of it. I see one estimate that development costs were €3.6 billion. So, by that valuation Shell won't make anything out of it, other than bad publicity.

Some sell-off all right.

* in fact they claimed that associated fields off Erris could be worth up to 50 billion. Obviously Shell don't seem to agree.
 

GDPR

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This giveaway you speak of. You do realise the licenses are for a finite period of time and so far pretty much every company that has invested in them has not turned any profit whatsoever.
But, but, but it's robbery based on what Norway has done (completely ignoring the actual huge oil/gas fields that are comparatively easy to access)
 

Sister Mercedes

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The Oireachtas has banned fracking here, without any public debate. I don't know whether I'm in favor of it, but surely we should look into domestic sources of energy before ruling them out based on panic and witchdoctors in the media. Then we complain that "everything costs so much here."
 

Lumpy Talbot

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No
One of those debates that seems easy as long as there is no oil field discovered. Soon as one is discovered the wailing and rending of clothes and tearing of hair that the state would make nothing out of it would begin.

If Shell has paid out billions for exploration rights and test wells and what have you I can assure you they are claiming much of it back and will have a spectacular tax profile on the relevant subsidiary in Ireland.

That's the other side of it. They'd happily talk about how much their costs are gross but never speak about how much of that they claim back.

It would be the same with Macquarie. The trick here would be to balance and promote exploration with a deal attached that gives the state a revenue per barrel on the gross.

I've no objection to making it profitable to explore but I would seriously question any royalty deal based on the 'net.

As others have pointed out this question is academic at the moment but it would become very important the moment any discovery is made and the thing about such deals is that they should be agreed ahead of any discovery, not by enriching lawyers for years afterwards and spending millions trying to get a different deal later while the oil or gas is pumping.
 

Sister Mercedes

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Many years before there was a housing bubble here, there was a bubble in oil exploration stocks.

In the 1980s if you were lucky enough to get a taxi after waiting an hour and a half at a taxi rank in Dublin, your taxi driver would regale you with his get rich quick scheme of shares in Atlantic Resources, Aran Energy etc etc. They'd soar and they'd crash and they'd soar and they'd crash. But in the end all that had really happened was the people who sold at the right time made money and everyone else lost. Just like the property bubble, except there wasn't a taxpayer bailout.

So Im well skeptical of anyone who says there's a fortune in Ireland's fossils.
 

Lumpy Talbot

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No
Can you imagine trying to do a deal with a farmer to raise cattle on his pasture and saying to him I'll give you a share of the 'net profits when the cattle go to the meat factor after all the vet bills and so on and all my costs are deducted.

He'd laugh in your face. And quote you the cost per head of grazing per season on his land. Nevertheless that is the sort of deal some distinctly iffy characters signed on behalf of the state in terms of oil exploration in Irish waters.
 

firefly123

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By the nature of the business exploration is mothballed when the price per barrel is low on the world markets and then picks up again when it becomes economically viable to spend to explore.

At this time it seems not to matter what the deal is with oil companies when they are sinking an occasional test well. But the sort of deals the state has offered oil exploration outfits in Ireland would leave the state with nothing if a discovery was made. Companies at the moment can defer taxation indefinitely on anything they do find and are effectively putting the cost of exploration on the state's tab anyway via the ability to claim tax breaks against such costs.

If any profit does appear then the state has signed deals which would leave them with a nominal amount per barrel AFTER the company involved has deducted all the costs possible from the gross price per barrel.

You can guess how much net would be left after the oil company accountants would have been at the gross price barrel. If the state has signed any deal at all for a share off the net the state has been hideously incompetent in opening up that situation. By all means encourage exploration and discovery but there is no excuse whatsoever for the state setting itself up to earn the square root of sod all off the net price per barrel.

It is the old boxing promotor's trick. Get a deal worth millions for the boxer in gross terms but then retain the contractual small print ability to decide what gets charged to the boxer for training camp costs, advertising and promotion et cetera so in the end the promoter gets the bulk of the purse and the dazed boxer is left holding a much smaller cheque calculated off the net.
Nope but I know that is the narrative that was circulated. Firstly Oil prices were NEVER higher than a few years ago and yet the oil companies didn't pounce. Yes the oil companies can write off their costs on any profits based on current licenses. The thing is though the licenses are for a finite period and they can be changed when they come up for renewal.
All of that lovely oil (that may or may not be out there) off the (extremely challenging) Atlantic coast of Ireland is still there. It hasn't been warehoused somewhere until an opportune time. There aren't stealth rigs off the coast waiting.

We often get compared to Norway but the reality is that the North Sea fields were much easier to exploit. If you are suggesting that we set up our own Statoil type company then it would have lost billions in the search for profitable oil.
 

Lumpy Talbot

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No
Many years before there was a housing bubble here, there was a bubble in oil exploration stocks.

In the 1980s if you were lucky enough to get a taxi after waiting an hour and a half at a taxi rank in Dublin, your taxi driver would regale you with his get rich quick scheme of shares in Atlantic Resources, Aran Energy etc etc. They'd soar and they'd crash and they'd soar and they'd crash. But in the end all that had really happened was the people who sold at the right time made money and everyone else lost. Just like the property bubble, except there wasn't a taxpayer bailout.

So Im well skeptical of anyone who says there's a fortune in Ireland's fossils.
True. But the intriguing thing is that if oil is never found then the deal the state signed doesn't matter. Trouble is if there is a discovery then the situation exists that the state would effectively get nothing out of it.

That's the sort of deal the native Americans used to be tricked into signing with Washington. Up until they got wise and realised the white man loved casinos.
 

EoinMag

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True. But the intriguing thing is that if oil is never found then the deal the state signed doesn't matter. Trouble is if there is a discovery then the situation exists that the state would effectively get nothing out of it.

That's the sort of deal the native Americans used to be tricked into signing with Washington. Up until they got wise and realised the white man loved casinos.

Ah well there's a good chance that at least one man made a fair whack out of it right, that's what's important.
 

Orbit v2

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Can you imagine trying to do a deal with a farmer to raise cattle on his pasture and saying to him I'll give you a share of the 'net profits when the cattle go to the meat factor after all the vet bills and so on and all my costs are deducted.

He'd laugh in your face. And quote you the cost per head of grazing per season on his land. Nevertheless that is the sort of deal some distinctly iffy characters signed on behalf of the state in terms of oil exploration in Irish waters.
Surely, you see the difference between raising cattle and the rather riskier business of oil exploration off the Irish coast?

You're right though it's only when a discovery is made that people sit up and take notice. It's like giving someone a lottery ticket as a present and then whinging about handing over such a valuable present if the ticket wins. That's basically what the left are like on this issue.
 

Roberto Jordan

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Can you imagine trying to do a deal with a farmer to raise cattle on his pasture and saying to him I'll give you a share of the 'net profits when the cattle go to the meat factor after all the vet bills and so on and all my costs are deducted.

He'd laugh in your face. And quote you the cost per head of grazing per season on his land. Nevertheless that is the sort of deal some distinctly iffy characters signed on behalf of the state in terms of oil exploration in Irish waters.
Your analogy is defective.
Imagine a desert without any grass, on which no one has ever found grass, but which might have grass someday if you look hard enough......now negotiate grazing rights with the farmer.
To extend your agricultural analogy lets think dairying:
When it comes to oil and gas Saudi, texas, siberia, the Norwegian fjords....these are the golden vale.
On the other hand we are some country in the levant....a whole lot of desert and rock and a tiny farming industry on a few green corners that is barely big enough to supply a local market, but also some areas that if you look at them the right way seem like they might have potential after significant investment. So you can charge the guy building teh diary plant based on fictional future yields comparable to south west cork or east limerick or you charge the guy a smaller sum in recognition he is otherwise highly unlikleyy to try given that he his probably going to be milking nothing except his bank account.
 

Lumpy Talbot

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Nope but I know that is the narrative that was circulated. Firstly Oil prices were NEVER higher than a few years ago and yet the oil companies didn't pounce. Yes the oil companies can write off their costs on any profits based on current licenses. The thing is though the licenses are for a finite period and they can be changed when they come up for renewal.
All of that lovely oil (that may or may not be out there) off the (extremely challenging) Atlantic coast of Ireland is still there. It hasn't been warehoused somewhere until an opportune time. There aren't stealth rigs off the coast waiting.

We often get compared to Norway but the reality is that the North Sea fields were much easier to exploit. If you are suggesting that we set up our own Statoil type company then it would have lost billions in the search for profitable oil.
The best deal possible would be enough to tempt oil companies to explore under a reasonable share of the gross thereafter per barrel. Technology is improving all the time and extraction from the world's most inhospitable places is now possible pretty much by robotics and automation.

I was reading not so long ago of the ingenious system of trailing scanners across wide areas of ocean by use of cleverly shaped 'birds' strung along the sonar nets which can scan and map the sea bed and what is below it for the right conditions for test wells. The 'birds' are essentially the leading edge of industrial design technology so that such scanning nets can be steered while trailed for miles along behind exploration vessels.

I know of an extreme conditions well which is fully automated and sits well above the Arctic circle and which is run like drone technology from a much warmer office in Canada.

All the technological advances the oil explorers are developing means much more accurate test drilling can take place and extraction technology is well beyond the rig and hard fellows in hard hat days clinging to a metal spar above the raging waters. We need to be aware that Ireland's sea jurisdiction has already yielded a significant gas field and that oil companies are aware that the geology offshore qualifies for exploration.

It isn't something we can afford to f*ck up by being unaware and careless.
 

firefly123

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So we can all agree that our oil is still there? It hasn't been stolen from us?
 

freewillie

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Its good to have something for the left whingers to whine about. Otherwise they might actually be getting in the way of peo0le doing something useful. As long as Murphy Daly and Coppinger pull thrir 100000 a year they will continue to lead the useful idiots
 


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