Pessimism as €1.5bn to be poured into Irish oil
Over €1.5bn is expected to be invested in Ireland's oil and gas exploration sector over the next two years but just 18pc of respondents to a new PWC survey rate the outlook for the industry here as favourable.
Despite the pessimism, 81pc of those surveyed still think there are huge untapped petroleum reserves off Ireland.
Exploration off Ireland has a long, expensive and largely fruitless history. With over €3bn spent over the past 45 years, drilling over 150 exploration and appraisal wells, just two major gas finds have been commercially exploited - Kinsale and Corrib. While some firms have identified offshore geological areas that are believed to be rich in oil and gas-bearing features, most are unproven and drilling results to date have been disappointing.
Those worse than expected results, coupled with declining oil and gas prices, have depressed sentiment in the sector. Just over 50pc of respondents in PWC's survey last year were optimistic about the outlook.
Providence Resources has been one of the most high-profile Irish firms involved in exploration in recent years, but despite a string of positive appraisals and seismic surveys, its shares have slumped.
PWC's new Oil and Gas Survey hows that due to the fall in oil and gas prices, 48pc of those it surveyed said they intend to defer or significantly curtail exploration investment in Ireland.
Last year, 91pc of those surveyed intended to maintain or increase their level of investment in Ireland. The price of Brent Crude - an industry benchmark - has halved in the past year to about $52 a barrel. Wholesale natural gas prices also fell last year. "The significant fall in the price of oil and gas has had a dramatic impact on the Irish oil and gas industry," said Ronan MacNioclais, a partner at PWC's oil and gas practice.
"Ireland is viewed internationally as a high risk location for investment in oil and gas exploration, due to the lack of historic commercial discoveries. At times of low oil and gas prices, investors will invest in high return low risk locations, which unfortunately we are not," he said.