REG - Lansdowne Oil & Gas - New Year Outlook and Energy Security Commentary

Lansdowne Oil & GasAnnouncement

08/01/2024 07:00

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RNS Number : 8703Y  Lansdowne Oil & Gas plc  08 January 2024

 

8 January 2024

Lansdowne Oil & Gas plc

("Lansdowne" or the "Company")

 

New Year Outlook and

 

Comments on Energy Security in Ireland to 2030 publication

 

With the completion of the recent equity placing following the Company's
General Meeting on 29 December 2023, the Company is now focused upon
progressing its Energy Charter Treaty claim against Ireland, following the
refusal to award a Lease Undertaking for the Barryroe oil and gas field
("Barryroe").

 

On 14 November 2023 the Irish Government finally published its strategy for
Ireland's Energy Security, and having reviewed this Lansdowne provides the
following comments:

 

The voluminous documentation produced identifies numerous actions to be taken
and the setting up of additional committees, all to be overseen by a new
Energy Security Group (ESG).

 

Some of the key findings in the report are:

·    Concern about gas supply leading to the need recognized for a
Strategic Gas Emergency Reserve.

·    Also concern regarding oil supply with need to strengthen National
Oil Reserves Agency (NORA).

·    Actions to be taken on both will add further cost burden to
consumers.

 

Lansdowne believes that an alternative pathway, allowing the development of
the Barryroe oil and gas field, would deliver greater energy security at lower
cost and with lower associated emissions.

 

Lansdowne considered that the report highlights the following key risks:

 

Supply-side risks:

 

·    As one of the most energy import dependent countries in the EU with
limited diversity of supply, Ireland is exposed to this risk. In 2022, 82% of
Ireland's energy needs came from imports. 48% of energy used in 2022 was from
imported oil and nearly 31% from natural gas. 74% of Ireland's natural gas
came from imports through two interconnectors from the UK.

·    A disruption of gas supplies from the UK, for whatever reason, would
have a significant impact on Ireland's economic and social wellbeing.

 

Demand side risks:

·    The dependence of the electricity system on natural gas is expected
to increase in the short to medium-term, particularly at times of very low
wind. In addition, the peak day demand for natural gas is expected to
increase. This means the electricity system will continue to rely on natural
gas as a fuel source as it transitions to a majority-renewables system and
phases out natural gas in the medium term.

 

Introduction of a Strategic Gas Emergency Reserve:

·    It is anticipated that a floating reserve (FSRU) will best meet the
criteria set by the Government.

·    The costs of this state-owned enterprise will be paid for by an
additional levy on the consumer, as applies for NORA (National Oil Reserves
Agency)

 

The Oil Sector

·    Ireland relies heavily on imports to meet its oil requirements as it
does not produce crude oil and is a net importer of refined products.

 

Given all of the above, it is extraordinary that Eamon Ryan Minister for
Environment, Climate and Communications and Minister for Transport blocked the
progress of the Barryroe oil and gas field, that contains abundant supplies of
both fuels, especially given the application was also noted as being
satisfactory from a technical standpoint.

The development of Barryroe would ensure secure indigenous supplies of both
oil and gas, with lower emissions/carbon footprint, compared with imports. A
study commissioned by Europa Oil and Gas (Holdings) plc and announced on 7(th)
March 2023, found that the Emission Intensity (EI) from the indigenous Corrib
Field at 5 kgCO2e/boe is 14% of the EI of imported gas from the UK and 3.5% of
the EI of LNG imported from the US.

Offshore Wind

Minister Ryan is placing all his faith in developing offshore wind at scale
and at pace. As recognised in the McCarthy Report on the Security of
Electricity Supply, "The ambition to decarbonise has not been matched by
sufficient management of the project delivery risks, with evidence of an
underestimation of risk in the sector."

A recent article on Offshore Wind in the Guardian newspaper (27 October 2023)
commented on the headwinds facing the industry. Siemens Energy had encountered
problems with the turbines it manufactures and was in rescue talks with the
German Government to secure €15 billion to shore up its balance sheet.

Vatenfall AB had stopped work on a windfarm project off the coast of Norfolk
as the recent 40% rise in costs meant it was no longer profitable.

The Danish windfarm giant Ørsted A/S announced a near £2 billion asset
write-down due to delays in windfarm projects offshore the U.S.

On 4(th) January 2024 Equinor ASA and BP Plc announced the termination of the
Offshore Wind Renewable Energy Certificate (OREC) Agreement for the Empire 2
project offshore the U.S.A. recognising that "commercial conditions driven by
inflation, interest rates and supply chain disruptions that prevented Empire
Wind 2's existing OREC agreement from being viable."

Conclusion:

It is the Company's view that the long delayed report on Ireland's Energy
Security has taken a blinkered approach, driven entirely by environmental
dogma, and will ensure that Ireland's energy insecurity will persist to 2030
and beyond and that the Irish consumer, already paying some of the highest
electricity prices in Europe, will face additional cost burden.  Energy
insecurity of this nature will be magnified many times over in the event that
global disruptions occur thus also multiplying the costs to the Irish
consumer.  Domestic energy supply can help to alleviate this multiplier
effect.

There is an obvious alternative pathway, to allow the development of already
discovered oil and gas resources in the Barryroe field, delivering greater
security at lower cost and with lower associated emissions.  There is no
reliable forecast which shows an elimination of oil and gas imports to
Ireland.  Domestic oil and gas can provide energy security and be provided at
a much lower emissions cost than imported oil and gas.

The Company remains willing to engage in any worthwhile or pragmatic
discussion with the Irish Government, however all attempts to engage in such
conversations at an appropriate level have been ignored by the Irish
government.  Without an ability to engage in a respectful and frank
conversation the Company has no alternative other than to pursue its
arbitration efforts under the Energy Charter Treaty.

 

 

For further information please contact:

 Lansdowne Oil & Gas plc             +353 1 963 1760
 Steve Boldy

 SP Angel Corporate Finance LLP      +44 (0) 20 3470 0470
 Nominated Adviser and Joint Broker
 Stuart Gledhill
 Richard Hail

 Tavira Financial Limited            +44 (0) 20 3192 1739
 Joint Broker
 Oliver Stansfield

 

 

Notes to editors:

 

About Lansdowne

Lansdowne Oil & Gas (LOGP.LN) is an oil and gas exploration and appraisal
company focused on the North Celtic Sea and quoted on the AIM market and head
quartered in Dublin.

In May 2023 the application for a Lease Undertaking for the Barryroe Field, in
which Lansdowne held a 20% interest, was refused by the Irish Department of
the Environment, Climate and Communications.

In June 2023 Lansdowne announced the commencement of action under the
Arbitration Process of the Energy Charter Treaty.

Since 20 September 2023, Lansdowne has been designated a "Cash-Shell" under
AIM Rule 15.

For more information on Lansdowne, please refer to www.lansdowneoilandgas.com
(http://www.lansdowneoilandgas.com) .

 

 

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