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A Knight in Oily Armour: Tony O’Reilly and Exxon Mobil
Saturday August 23, 2008 16:59 by Tel
That the production wing of global energy corporation, Shell, has a presence in the west of Ireland is now well known. Shell have been joined by another of their kind; Exxon Mobil, sometimes known as Esso. It's a company which, like Shell, has left a long dark oil slick like trail of controversy and notoriety across the globe. Exxon Mobil are in alliance with Sir Anthony O’Reilly, Ireland’s most influential businessman
In March of this year, Exxon Mobil was awarded licenses for exploratory drilling in the Porcupine Basin, which is in the Atlantic roughly parallel with Clare and Kerry. For the exploratory bid Exxon Mobil combined in a consortium with Providence Resources, and Scottish firm Sosina Exploration.This isn’t the first joint venture involving these companies. In February 2006 they announced a program to develop the Dunquin prospects, which are finds of oil and gas, also in the Porcupine Basin. These finds alone are potentially worth 20 billion euro. Providence Resources are also engaged in exploration off the south east coast.
The tale of this latest energy industry development in the west, has then at least two strands: the potential political influence that can be brought in to support Providence Resources, and the international record of Exxon Mobil.
Forty five per cent of Providence Resources is held by Sir Anthony O’Reilly, and his son is the company’s CEO. Sir Anthony is also, of course, CEO of, and owner of a large shareholding in, the Independent News and Media group. IN&M owns the Sunday World, the Sunday Independent, the Star, the Irish Independent, the Evening Herald, part of the Sunday Tribune, many local papers in Ireland and many media outlets overseas.
There are clear grounds for linking the commercial interests of the O’Reilly empire, and the political influence it wields through its major media holdings. To look at this in the context of oil and gas consider the wild unsubstantiated slanders which have been directed at the Shell to Sea campaign in Mayo by O’Reilly papers. Something which they engaged in earlier, and to a much greater extent, than the rest of the national media. This reached a crescendo of almost parody in August 2007 when one columnist opined “Shell has been scandalously remiss in not employing someone to bump off a few of these fellows” as ““the rule of law has to be enforced, by apparently harsh measures if need be””.
It would not be unreasonable to imagine there are links between the particularly extreme stance on this issue taken by the O’Reilly newspapers and the fact their owner also has interests in oil and gas. Especially when, as we shall see, in other instances there are documented links between those newspapers’ political line and the other commercial interests of their major shareholder. Indeed many years ago O’Reilly himself ascribed some of his successes in gaining oil and gas exploration rights to political influence derived from media ownership.
O’Reilly has long been committed to a particular vision of the development of Ireland’s off-shore resources, previously through the company Atlantic Resources, which was a spectacular failure. According to his very sympathetic biographer, Ivan Fallon, this was “the most costly and disappointing venture of his corporate career, a black hole into which he poured millions of pounds of his private wealth, never to produce a single barrel of oil.” The share price of Atlantic Resources crumbled after a much hyped oil find turned out to be a mere puddle. Back then, in 1983, O’Reilly was interviewed by American magazine Forbes, and outlined how his geologist selected six blocks of seabed and how Atlantic acquired the exploration rights for those blocks, saying ““Since I own 35 per cent of the newspapers in Ireland I have close contact with the politicians. I got the blocks he wanted.”
It is interesting to digress to O’Reilly’s interpretation of the failure of Atlantic Resources.
According to his biographer, Sir Anthony O’Reilly “would dwell angrily on the political mishandling of Ireland’s natural resources policy, which he reckons is the real story of Atlantic Resources”, this mishandling was the “utterly destructive”, “simplistic public notion that Irish oil and minerals belonged to the Irish people at large.” In fact the terms for oil and gas exploration and production existing then, the tax rate, royalties, licensing, and so on, were much less stringent on the oil companies than those prevalent across much of the world. Nonetheless conditions were to change and between 1987 and 1992 the terms were pared back to the extent that companies can write off production costs against tax, conceivably they may pay no tax at all. In the words of Mike Cunningham, former director of Statoil Exploration Ireland, ““No other country in the world has given such favourable terms as Ireland.”” Contrary to O’Reilly there was actually more exploration going on in Irish territory before the change to a new low/no tax situation in the late 80s and early 90s, than there has been since then.
With other issues the relationship between political influence through a media monopoly and commercial interests is better documented.
In September 1994, as reported in the Irish Times some years later, there was a meeting between the Independent Newspapers group and a representative of the then Taoiseach John Bruton. Sir Anthony O’Reilly had personally demanded reform of the libel laws, a ban on below cost selling by British newspapers, and exclusive MMDS licences, the later being the wireless ‘cable’ TV system. The meeting was particularly concerned with MMDS, and the Independent group’s demand was rejected. According to the government report of the meeting the Independent Newspapers group’s representatives said: "We will mount a full frontal assault on you, as a Government, in the elections.", the same was reported in an Independent group memo slightly less dramatically as
"We said they would lose INP as friends and would mean any future administration would have a large bill to pay." INP standing for Independent Newspapers.
Subsequently, just before the 1997 general election, the Irish Independent newspaper swung over to supporting Fianna Fail, running an editorial attacking John Bruton’s government, headlined “Payback time”. This was the first occasion in its long history that the newspaper did not back Fine Gael.
The new government was to facilitate O’Reilly’s takeover of Eircom, and, to bring the story up to 2007, following a high level meeting in the spring of that year directly between Ahern and O’Reilly the Independent newspapers changed tack in regard to their line on the issue of Ahern finances to taking a very Fianna Fail friendly one.
A related issue is that of the secret payment of Ł30,000 to disgraced former minister and jail bird, Ray Burke, by an O’Reilly company in 1989.
At this time Burke had ministerial responsibility both for MMDS licences and other telecommunications matters, and natural resources.
Burke was a key figure in the development of the new terms for oil and gas exploration and production. The major changes being introduced by him in 1987 being the tax write off, the removal of royalty payments, and the abolition of any state participation. Burke has been found in the tribunals to be corrupt and to have received corrupt payments in the late 80s.
If that is one wing of the partnership, what of the other, Exxon Mobil.
When the partnership between Providence Resources and Exxon Mobil was announced in the spring of 2006, then Minister for Natural Resources, Noel Dempsey, declared he particularly welcomed the arrival to Ireland of Exxon Mobil. A consideration of their global record answers the question whether their arrival should be greeted or feared. It is a record which, even in its better known aspects is vast, from Chad through to Columbia, from Texas to Indonesia, so particular examples will have to serve to paint the general picture.
Exxon Mobil is currently fighting a number of legal battles in the United States.
One recent case arose out of the Exxon Valdez oil spill in Prince William Sound, Alaska, in 1989. This spill, involving at least 11 million gallons of crude oil, contaminated 1,500 miles of coastline. The area was found to be still contaminated 15 years later.
In order to gain permission to put their tankers through Prince William Sound Exxon promised doubled-hulled ships, to have escort vehicles, and equipment with the capacity to clear up a large spill. None of this was put into action. Moreover they reduced the staffing levels on the tankers, just to make a one hundred thousand dollar saving.
In 1994 an Alaskan court ordered Exxon pay $5 billion damages to over 30,000 people affected by the disaster. The company appealed the ruling, and eventually, in June of this year, the payout was reduced by 90%. Another response to the Exxon Valdez episode was the establishment of a separate subsidiary shipping company, owned by Exxon Mobil, functioning as a legal shield so the Exxon Mobil corporation itself may not be held responsible for future maritime disasters.
While this maybe an extreme incident, it shouldn’t be thought of as an isolated one, but rather as the pinnacle of consistent corporate practise. Other parts of the Alaskan oil industry show the same process at work. The Exxon Valdez was carrying oil from the port of Valdez, the terminal of the Trans Alaska pipeline. This pipeline is operated by a company called Alyeska, jointly owned by Exxon Mobil. In 2005 the company’s Chief Operating Officer, second in command over the pipeline, revealed a list of around one hundred potential or actual problems with the safety of the line. His position in the company was terminated soon after. Other veteran staff backed up his stance. Three years earlier Alaskan media revealed a letter from the owners to the operators seeking to reduce the amount spent on safety.
A year previous to that Alyeska’s oil spill contingency plan was unable to adequately address the puncture of the pipeline by a gunshot, oil poured out for a full 36 hours. So the corner cutting that led to the Exxon Valdez disaster is also a feature earlier on the Alaskan oil route.
This isn’’t something peculiar to Exxon Mobil either. The Trans Alaska pipeline starts in the Prudhoe bay oil complex, partly owned by Exxon Mobil, but operated by BP. In 2005 a maintenance worker and trade unionist at the site was interview by documentary makers saying “BP is cutting back on maintenance mainly for short term profit, they have cut the budget on maintenance and our systems have degraded, the pipelines are worn out, the pipelines need to be replaced, BP have cut back on our emergency response services, while they are taking care of the short term budget. We have had people who have been injured, we have had people who have been killed, we have had explosions and fires and damage to the environment.” . In 2006, a year later, there was a massive oil spill at Prudhoe bay. Subsequent official inquiries found miles of pipeline to be corroded, and that “draconian” cost cutting had taken place.
Do we have any reason to think Exxon Mobil operations in Ireland will be conducted in a more responsible fashion than in Alaska?
We don’t know what is out there beneath the Atlantic for Exxon Mobil to get. We can speculate that rising oil prices, technological advancement, and greater restrictions on private exploration and production in the main fossil fuel producing areas, will make Ireland “a new hydrocarbon frontier", as O’Reilly junior put it. Obviously this is the aim of those parts of the industry exploring off-shore Ireland, and of those parts of the state engaged in supporting them. Efforts to expand the territorial waters, - that is that much of what is now international territory in the seas is to come under the control of individual states, could also be a factor in the potential oil future of this island.
It is worthwhile then to imagine what would result if their “hydrocarbon frontier”” project is successful, based on what we know of other instances. We could see the same jeopardising of safety and the environment in the interests of reducing costs and increasing profit as in the Alaskan cases.
We know that the point of a corporation is to do anything to produce a good return for their shareholders. We can be sure the exploitation of resources will be carried out by companies with the intent of making the most profit with the minimum outlay. That is after all the point of business. A failure to do this would mean a failure to attract investment, and ultimately mean going out of business.
It is the regulatory mechanisms of the state, which in theory, should be the sieve through which profit accumulation passes on its way to becoming something socially acceptable. It is in ways a very dubious theory. Not least with who decides, and how, what is socially acceptable. Not to mention the obvious lack of any potential input from future generations who will have to live with decisions made now.
Sticking with the theory though, can anyone express confidently that the Irish state will successfully regulate a burgeoning oil and gas industry, given that it has the most generous taxation set up for exploration and production worldwide? Given that a major player in the local industry has great influence in the Irish body politic. And given that the state produces planning disasters out of housing estates and roads, never mind refineries.
In fact I think we can be so sure of it that I havn’t mentioned yet the strongest grounds for arguing that the state will not make sufficient environmental protection to alleviate the inevitable environmental destruction the industry will create. The vanguard of that industry is already here. The Rossport experience has shown the lengths the state is willing to go, not to regulate the companies, but to facilitate them to an extravagant extent.
Note legislative changes exempting the Rossport pipeline from planning permission, and allowing Compulsory Acquisition Orders to be used by a private company to seize the land for the route of that pipeline. Then later An Bord Plenala overruling their senior planning inspector when he recommended a rejection of the plan to locate a refinery at Ballinaboy. Finally imprisonments and the stationing of a large force of Garda as the coercive power behind those decisions.
It is unquestionable that the potential is there for future resource developments to replicate the Rossport scenario, with the planned sacrifice of a community’s living space for shareholder gain.
The case that an alteration in state policy in regard to such matters could be brought about from within parliament is greatly weakened by the presence in government of the Green party. It is still a green light all the way for Shell in Mayo, the N.R.A. in Tara, and the U.S. Military in Shannon. If the purpose of private enterprise is to make profit no matter what, and the state is willing to facilitate that irrespective of environmental cost, then another force is needed to counterbalance big business and, to some degree, bring environmental protection about.
This can only be found in the development of an opposition movement based outside the Dáil circus. It seems very unlikely that such will arise. Reading about 20,000 people attending an anti-nuclear festival in Wexford 30 years ago seems very far removed from today’s circumstance. Nonetheless, this is the only alternative.
- This article is included in Galway based zine Yellow Roman Candles which should be on sale in Charlie Byrnes’ bookshop very shortly, and in other places in the city, or you can get the pdf of the zine by e-mailing thevillagegreen(AT)gmail.com - with this: @ put in the address where it says (AT)
Related Links on Shell to Sea and the Media:
Shell to Sea and the Russian attack on Georgia- Evening Herald finds a connection
The Irish Times plugging for Shell Oil in Mayo again
Rossport Solidarity Campaign: Still attracting Front Page Coverage.
Shell 2 Sea protest outside Independent News Papers
RTE breach poll guidelines and fail to publish a key poll finding
Sunday Indo reckon Shell to Sea campaign to redolent of "the North"
Maura Harrington singled out by Sunday Independent
The Political Wing of Providence Resources Launches Another Salvo At Shell to Sea
Yoho I'm a Provo! or the Never Ending Sunday Shell Smear
Daily Mail's Propaganda War against Shell to Sea
Shell and the Garda in Mayo: How the Papers reported it.
Sunday Press Review: MSM Inveighs Against Rossport and Anti-Fascists.
Socialism, Shell, the Sindo, Sir Tony, and Selling the Family Silver.
Related Links on Exxon Mobil:
Corporate Watch on Exxon Mobil
Refinery Reform Campaign
New Expose´of ExxonMobil, "Out of Balance" Released
Exxonmobil's contribution to global warming revealed
the exxon files - exxonmobil continues to secretly fund climate change deniers
Some Like it Hot - Exxon Mobil Funding of Climate Change Denial
Greg Palest - Court Rewards Exxon for Valdez Oil Spill
Documents Reveal Trans-Alaska Pipeline In Trouble
Deadly Drilling in Aceh
The Acehnese Resistance Movement and Exxon Mobil
Oil and Mining Projects Threaten Communities in Aceh and Papua
Exxon Mobil in Columbia