Thanks to Donnacha Ó Briain for the audio. This is a recording of the talk I gave at the Unlock Nama campaign launch, which took place on Saturday 28 Jan 2012, at 66-67 Great Strand Street, Dublin 1. It’s about 22 minutes long. At the start I drew a diagram on some sheet paper on the [...]

Thanks to Donnacha Ó Briain for the audio.

This is a recording of the talk I gave at the Unlock Nama campaign launch, which took place on Saturday 28 Jan 2012, at 66-67 Great Strand Street, Dublin 1.

It’s about 22 minutes long.

At the start I drew a diagram on some sheet paper on the wall behind me, the image below is a more professional version of it.

For more on Unlock Nama, see here, and for more on the day itself, see here.

In an interview last year with the online journal, Proactive Investors, Tony O’Reilly Jnr did a pretty good job of explaining the business model of Irish middleman capitalism, although I doubt that was his intention. The link to the recording is here, but the edited clip itself is at the end of the post. The extract in [...]

In an interview last year with the online journal, Proactive Investors, Tony O’Reilly Jnr did a pretty good job of explaining the business model of Irish middleman capitalism, although I doubt that was his intention.

The link to the recording is here, but the edited clip itself is at the end of the post.

The extract in bold italics below is a great summation of the Irish comprador class business model.

O’Reilly more or less says that Providence’s selling point is their role as intermediaries between foreign capital and the resources of the State.

Here’s the transcript:

- Tony, thank you very much for joining us for this interview.

- Thank you

- Providence Resources has attracted some heavyweight partners including ExxonMobil, ENI, and Petronas for its ambitious off-shore Ireland oil and gas exploration appraisal and development projects. What do these heavy-hitters see in Providence Resources’ portfolio of off-shore Ireland projects?

- I think what they see is a local partner in Providence Resources the company that has actually been operating in off-shore Ireland in various corporate guises for over 30 years and its current incarnation is Providence. We’ve been around since 1997 so we have extensive knowledge of the basins off-shore Ireland, the fiscal regime, the licensing and operating conditions, and I think that’s what these companies like when they come to a new country. They like to have a local partner to help them navigate through particular issues that may come before them. In terms of our portfolio I also think they like the balance of our portfolio in that it’s a mixture of high-impact exploration but with a heavy dose of development projects.

- what’s your thoughts on the fiscal regime in Ireland for oil and gas companies?

- I think the fiscal regime in Ireland is very positive. It’s attractive. It’s purposely created to try and entice inward investment, which is what Ireland needs in terms of a more wells drilled offshore island. So with a tax take of 25 per cent, corporation tax, going up to 40 per cent for very large fields, it is one of the more attractive fiscal regimes in the world. No royalties. And as I say it was particularly designed that way to attract inward investment because Ireland needs more wells drilled. There’s only been about 155 wells drilled, offshore Ireland in the past 40 years and so I think the government recognised the need to try and attract inward investment.

Yet, the inward investment O’Reilly talks about here is quite clearly going straight to Providence Resources and its shareholders - the £55 million oil minnow - with the Irish State a very distant second.

The interview was recorded in June 2011 and O’Reilly’s flagging of his heavy-hitter partners shows that the multinational oil corporations had a vested, if somewhat covert, interest in the last round of license options which were issued in October 2011.

It’s just that their interests are expressed via Providence Resources - the local guys who understand the tax laws and fiscal regime, and who have all the right contacts.

As an aside, and as an indication of the network of Ireland’s comprador class, ENI Ireland - investors in Providence Resources - works out of the offices of Arthur Cox and Co.

I’m toying with the idea of calling this model of capitalist endeavor, Vichy Capitalism, in honour of the Vichy government in France during the Second World War. I think it helps convey what these guys are actually doing.

Anyway, here’s the big man himself.

Enjoy.

People’s News latest issue containing articles on: Permanent Austerity Treaty; Final Nail in coffin of economy; Re-writing history; ETUC opposes austerity treaty; A referendum now!; Ireland - austerity’s poster child; Leitrim’s gas could yield ?30 billion profit for foreign company; Merkel demands more ‘integration’; German Green euro-bully at it still; EU funds may plug gaps in member states’ military spending; Varadkar changes his tune; British campaign for EU [...]

People’s News

latest issue containing articles on:

Permanent Austerity Treaty;
Final Nail in coffin of economy;
Re-writing history;
ETUC opposes austerity treaty;
A referendum now!;
Ireland - austerity’s poster child;
Leitrim’s gas could yield ?30 billion profit for foreign company;
Merkel demands more ‘integration’;
German Green euro-bully at it still;
EU funds may plug gaps in member states’ military spending;
Varadkar changes his tune;
British campaign for EU referendum;
A correction;
France and Germany push for greater “tax-cordination;
Treaty ratification problems;
Today Eurovision, tomorrow the EU……;
Greece still resists;
An bhfuil cead agam dul amach?

With the IFSC now central to the government’s growth plans, some figures which may be of interest. The only figure I can find for how much corporation tax the IFSC contributed is the figure for 2010. it’s ?1.4 billion - Dept. of the Taoiseach last July, ( citing a private report, not Revenue, which is interesting in [...]

With the IFSC now central to the government’s growth plans, some figures which may be of interest.

The only figure I can find for how much corporation tax the IFSC contributed is the figure for 2010.

it’s ?1.4 billion - Dept. of the Taoiseach last July, ( citing a private report, not Revenue, which is interesting in itself. Why go to a private company for the research when Revenue collects the actual money?)

The headline figures for exchequer returns is available here on revenue.ie

for every ?100 raised by the exchequer that year, workers and citizens contributed ?67 via PAYE and VAT , while the IFSC contributed ?4.40

In other words, for every ?67 the citizens of Ireland gave in 2010 to help maintain Ireland as a State, the IFSC, which benefits hugely from Ireland’s tax regime, gave ?4.40.

It’s not even a pint, is it?

In October 2011 Pat Rabbtte gave out thirteen licenses to twelve companies (press release here). The amount of blocks left around Ireland can be seen in this PDF map here, and the way it is done in the UK and other countries is explained in this SIPTU document from last year, available here (see pages [...]

In October 2011 Pat Rabbtte gave out thirteen licenses to twelve companies (press release here). The amount of blocks left around Ireland can be seen in this PDF map here, and the way it is done in the UK and other countries is explained in this SIPTU document from last year, available here (see pages 13 and 14).

When I talk about how this is geared towards speculation, I’m not talking about speculation on Ireland resources, but speculation on the licenses to explore the Irish block.

The Irish model is geared towards speculation on the paper asset - the license - rather than the actual assets - the natural resource.

The licenses which Pat Rabbitte gave out in October were not frontier licenses, they were two-year licensing options.

Frontier licenses ‘typically require a substantial upfront investment by companies’.(’Ireland awards offshore exploration licenses‘, Financial Times, 17 October 2011)

The companies which won in the October round of licenses DO NOT HAVE TO EXPLORE ANYTHING. They just have to come up with a detailed plan in order to apply for one of the 15-yr licenses in two years’ time.

Nobody else can apply during this period. The companies that won the licenses in October 2011 get first option, and nobody has to put up any money for exploration.

Which is how a company with no assets, no capital, and absolutely no experience in gas and oil exploration ended up with a license last year, i.e. Bluestack Energy.

Thankfully, Pat Rabbitte explained the business model to the Financial Times last year.

Pat Rabbitte, Minister for Energy, told the Financial Times it was possible some major oil groups could join with license winners at a later stage.” (’Ireland awards offshore exploration licenses‘, Financial Times, 17 October 2011)

In other words, you get the license and then wait for somebody to buy you out.

One of the other companies, Chrysaor, is backed by the hedge fund management company, Barclays Capital.

Again, it is the paper asset - the license - which is the speculative asset, and not the actual oil and gas fields.

That’s the way the system evolved in Ireland over the years. The speculation on the license rather than the resource is what drives that particular business model.

This has been going on since Sean Lemass sold the lease for the right to explore the entire Irish jurisdiction, and sold it for £500 - with a one-third section of the lease changing hands three years later for £230,000.