The Irish oil and gas sector continues to show signs of recovery after a turbulent period, according to a new PwC survey.
Nearly two thirds (63%) of Irish oil and gas players rate the overall outlook for the next two years as favourable. Investment levels in Irish exploration are predicted to be in the region of €500 million over the next two years. However, almost 80% of participants expect oil prices to increase in the next two years, with some believing the increase will be as much as 20% or more.
Pictured are (left to right): Stephen Ruane, PwC; Tony O'Reilly, CEO, Providence Resources, Ronan MacNioclais and Catherine Murray, PwC.
Commenting on the survey results, PwC Oil and gas practice partner Ronan MacNioclais said: “The stabilisation and improvement in oil and gas prices in recent times has had a positive impact on the industry. Nearly two-thirds are positive about the future outlook for the sector. This is borne out by the fact that a number of drilling programmes are planned in Irish waters over the course of the next few years.
"Technological advances have assisted in de-risking Ireland as a location for oil and gas exploration,” said MacNioclais. “The Government has also done a good job in terms of marketing Ireland internationally as a favourable oil and gas territory, and some of the majors in the industry now have licences in Irish waters. They are bringing new approaches and new ways of thinking to the industry, and I would be optimistic, as echoed by survey participants, about the possibility of future commercial discoveries in Ireland.”
More pessimistically, however, almost all respondents viewed the Petroleum and Other Minerals Development (Amendment) Bill as posing enormous threats to Ireland’s energy security and supply. 89% reporting said it would pose ‘significant damage’.
MacNioclais said: "In these times of uncertainty, it is critical that the Government continues to take steps to encourage investment. However, the Climate Emergency Measures Bill is a huge cause of concern for the industry. The absence of any domestic oil and gas supply for the country poses enormous threats. The country is heavily dependant upon supplies from the UK and further afield. The Government is strongly opposed to the Bill and rightly so as it would be a huge gamble to pin the health of the nation upon continued supplies from these countries, particularly at a time of such geopolitical uncertainty.”
The survey shows that prices are still expected to be well short of the record levels of $147 per barrel last seen in mid-2008. With this in mind, participants were asked for their view on the minimum price necessary to support a progressive and sustainable Irish petroleum industry. 66% (2017: 78%) said a price in the range of $50-$70 per barrel would be required. This year 28% of respondents stated that they plan to continue with Irish exploration activities.
While Ireland is still regarded as a high risk location for exploration activities due to the lack of commercial discoveries, the recovery in oil prices in recent times and the potential returns available in Ireland offer hope to those incurring the significant costs associated with exploring here.
MacNioclais continued: “It is acknowledged that, as a country, we need to transition to low carbon fuels as well as renewables but this will not happen overnight. Ireland, together with other global economies, will need to continue to place a heavy reliance on oil and gas for many years to come until consistent supplies of alternative sources of energy reach acceptable levels. Enacting the Climate Emergency Measures Bill in Ireland would be detrimental to Ireland’s economy and it is welcome that the Government is making soundings to oppose it.”
Notes to editors:
About the survey
The survey was carried out during the summer of 2018 amongst the key players in the Irish Oil and Gas industry including foreign and Irish headquartered entities carrying out petroleum production, exploration and services activities.
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