Dublin Opinion

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.

 

 Tony O'Reilly Jr [1:47m]: Play Now | Play in Popup