Background: The UK recently decided to end the Common Purse Agreement between the Island and the UK dramatically reducing revenues to the Manx exchequer and prompting a great deal of internal analysis into the future for the IOM. Back in October 1966, the Manx and UK governments entered into an agreement whereby the Isle of Man was to receive a share of royalties and rentals from oil and gas exploration on the whole of the UK continental shelf, through what was then called the Common Purse Customs agreement.
In return, the Island relinquished any interest it had to oil and gas exploration and production beyond its territorial waters. At the time this was seen as a good deal, but during the 1970s oil prices shot up and an increase in exploration in the Irish Sea resulted in the discovery of a series of highly productive gas and oil fields. In July 1991, the UK and Manx governments agreed to extend Manx territorial waters from three to 12 nautical miles. As part of the agreement, the Island relinquished its right to a share of the royalties and rentals from the UK continental shelf.)
Peter Karran (Lib Vannin, Onchan MHK) understands that the Isle of Man gave up its rights to revenue from oil and gas discoveries in the Irish Sea when it struck a deal with the UK to extend the limit of Manx waters from three to 12 nautical miles. But he claims, the United Nations international convention on the law of the sea specifies that coastal states should have the right to an exclusive economic zone (EEZ) extending to the mid-way line between itself and its neighbours.
And if this is the case, the Millom gas field and a significant part of the North Morecambe gas field would come within the Isle of Man EEZ as would a large section of the UK-Ireland gas interconnectors. Mr Karran believes the Customs agreement with the UK should be renegotiated on this basis, suspecting that the Island will eventually be forced into scrapping the deal anyway.
He intends to move a private member’s bill in the House of Keys calling for the Territorial Sea Act 1991 to be amended to include a new definition of Manx waters such that its limit would be taken as the median line between the Island’s coast and that of the UK or the Republic of Ireland.
The Chief Minister says that the continental shelf issue has no bearing on the VAT debate. It will be interesting to see if the Manx people agree with him. More.
