Earlier this month, Providence Resources announced that an oil field at Barryroe, off the coast of Cork, is expected to yield 280 million barrels. The company’s CEO, Tony O’Reilly Jr, the son ofthe media mogul, told the Today programme that this was ‘very good news for Providence shareholders and the Irish economy’. The first part of his statement is undoubtedly true:Providence’s share price rose sharply on the back of the Barryroe news. That Ireland’s economy will benefit is much less likely.

According to the World Bank, Ireland offers ‘very favourable’ fiscal terms for oil and gas companies.At 25 per cent, Ireland’s government take is among the lowest in the world. Norway’s, by comparison, is 78 per cent; Yemen’s is 95 per cent. Ireland also boasts some of the most generous tax-writeoffs in the industry: companies can offset all costs before they declare profits, including any ‘incurred in the 25-year-period prior to commencement of field production’, from such activities as drilling unsuccessful wells in Irish waters.

When a company finds oil or gas in Irish territory, ownership and control of the resource is transferred in full to the company; no royalties are paid to the state; the company canchoose to export the oil or gas; they do not have to land the resources in Ireland or use Irish services or personnel.

In the late 1950s, the minister of industry and commerce (and future taoiseach) Seán Lemass soldthe first exclusive exploration drilling rights in Ireland for £500 to Madonna Oil, a shell company owned by three American representatives of the Messman-Rinehart OilCompany of Wichitaand the Ambassador Oil Corporation of Forth Worth. In 1961, a two-thirds share in the rights was sold to Continental Oil and Ohio Oil International for $450,000.

In 1971, Marathon Oil (as Ohio Oil International had become) discovered gas off Kinsale, Co. Cork. The terms of the government deal under which the gas was extracted were so favourable to thecompany that it became an issue in the 1973 general election. Influenced by Norway’s creation of a state oil company, the new minister for industry and commerce, Labour’s Justin Keating, set aboutrecalibrating Ireland’s relationship with oil and gas companies: the state would have a stake in any commercial find; corporation tax on oil and gas revenue was set at 50 per cent; productionroyalties would be levied.

Keating’s amendments did not last long. In 1987, the energy minister Ray Burke – who in 2005 was jailed in relation to corrupt payments received in office – abolished royalty payments and stateparticipation in oil and gas development. In 1992, the finance minister (and another taoiseach in waiting) Bertie Ahern cut corporation tax for the industry from 50 per cent to 25 per cent, whereit broadly remains, despite some alterations to the new licensing terms made by the Green party minister Eamon Ryan in 2007.

Ireland’s oil and gas regime reflects the dominant logic of Irish economic policy: low taxes will make Ireland attractive to foreign companies, even if they are simply harvesting the country’snatural resources and creating little in the way of jobs or tax revenue. That speculative Irish licence holders get rich in the process is no cause for concern.

A year ago, the minister for communications, energy and natural resources, Pat Rabbitte, announced that 13 new offshore exploration licences had been awarded. ‘Ireland must continue to communicatethe message to international exploration companies that Ireland is open for business,’ he said.

In 1973, the Union of Students of Ireland published a pamphlet entitled What’s Mined is Ours! The Case for theRetention and Development of Irish Minerals under Public Ownership. According to the foreword, ‘those with a vested interest in the development of Irish mineral resources appear to have accessto unlimited finance for public relations purposes.’ One of the text’s three signatories was the USI president, Pat Rabbitte.