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EurOil COMMENTARY EurOil

Ireland takes aim at gas

After ending the search for oil last year, Ireland is now banning the issue of new gas licences

IRELAND IRELAND’S new government has vowed to end symbolic gesture as the country is 99% reliant on
exploration for natural gas, a move which the imports. But in Ireland, the ending of gas explo-
industry has warned will stifle investment and ration is not symbolic.
increase the country’s dependence on imports. Irish oil and gas explorers have had a dif-
After months of negotiations after general ficult time over the past year. Last August, the
elections in Ireland, a new coalition government then-government prevented a controversial
was formed on June 27 between the country’s bill brought up by Ireland’s People Before Profit
two main political parties, Fine Gael and Fianna (PBP) Party that would have blocked the issue
Fail, and the Green Party. The group has pub- of new oil and gas drilling permits. The govern-
lished its Programme for Government, which ment said the bill entailed losses from obligations
includes policies aimed at lowering Ireland’s car- to existing permit holders, and potential legal
bon emissions. The programme has been praised pay-outs if operators challenged the legislation.
WHAT: by environmentalists, but the oil and gas indus- However, former Prime Minister Leo Varad-
Ireland’s new government try says it will in fact increase Ireland’s carbon kar went on to announce a ban on new oil
has banned the issue of footprint, damaging its economy in the process. licences in September. The share prices of oil-fo-
new gas exploration and Ireland will no longer issue licences for the cused operators such as Providence Resources
production licences, and exploration and production of gas, the pro- and Lansdowne Oil & Gas plunged on the news.
also opposes imports of gramme states. The former Fine Gael minority And now the new government has taken aim at
fracked gas. government took a similar step in banning new gas.
oil licences, but stated at the time that gas devel-
WHY: opment would continue, as it is a “transition Tough on fracked gas
The move follows a fuel.” The government also opposes imports of fracked
similar ban on oil Ireland meets around 60% of its gas needs gas, which could spell an end to at least two of the
licences last year. with supply from the Corrib and Kinsale Head LNG import projects underway in Ireland.
gas fields, as well as several smaller deposits. But “We do not support the importation of
WHAT NEXT: these fields have been producing for decades and fracked gas and shall develop a policy statement
By shutting the door on are now mature. As a result, Ireland has been get- to establish that approach,” the government said
domestic supply and LNG ting an increasing share of its gas from the UK. in its programme. “As Ireland moves towards
imports, Ireland risks The industry is hopeful that other fields sim- carbon neutrality, we do not believe that it makes
becoming too reliant ilar in size to Corrib can be found. In a state- sense to develop LNG gas import terminals
on UK imports for its ment in mid-June, the Irish Offshore Operators’ importing fracked gas.”
security. Association (IOOA) dismissed the govern- US-based LNG exporter New Fortress
ment’s position on gas exploration as “virtual Energy is already struggling to make headway
signalling.” at the 5bn cubic metre per year Shannon regas-
“Not everything in this document is good for ification project, because of opposition from
the environment. Measures such as banning gas environmentalists. The government said it
exploration licences are virtual signalling ges- would exclude the project from the EU’s 2021
tures which, while appealing to the Green voter, list of infrastructure projects of common inter-
will ironically increase our emissions,” IOOA est (PCIs), which can gain access to grants and
CEO Mandy Johnston said. other support.
The IOOA argues that by preventing new Another venture in hot water is the 4 bcm
discoveries from being made, Ireland will rely per year Inisfree floating LNG (FLNG) import
ever more on imports, which results in more project, proposed by US developer NextDecade,
emissions because of the distances these supplies which would take gas from the company’s Rio
must cross. Grande export terminal in Texas. London-listed
“In addition, the measure will deny the west firm Predator Oil & Gas also wants to build an
coast of Ireland significant investment from this Irish LNG terminal, but has stressed that it will
industry,” Johnston went on. “We are the only not take fracked gas, without specifying the ori-
country in the world as reliant on energy imports gin of supplies it will receive.
to introduce a ban like this.” The government’s programme notably does
There has been growing antipathy to not contain any measures for reducing Ireland’s
upstream development in Europe, which already gas usage, and here lies its key flaw. While closing
relies to a great extent on oil and gas imports. the door on domestic supply and opposing new
A number of countries have taken steps to import infrastructure, Ireland risks making itself
curtail oil and gas production, including by increasingly reliant on a single delivery route
banning the use of hydraulic fracturing. France from the UK for its gas. This not only presents
went as far as to pass a law in 2017 banning oil supply risks but will also drive up the cost of Ire-
and gas production altogether by 2040 – a largely land’s energy. ™

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