NEW GUIDELINES FOR oil and gas exploration off Ireland are hoped to attract more industry to the sector.
It will also see an increase in the State’s share of any profits from extraction, but falls short of what was recommended by an Oireachtas committee and has been described as “cosmetic”.
New fiscal terms were drawn up following a report by Wood Mackenzie into Ireland’s current regulations for the sector.
Minister for Natural Resources Pat Rabbitte said these will ”engender industry confidence in the stability and predictability of Ireland’s oil and gas fiscal terms”.
The 25% corporation tax rate that currently applies to petroleum production will remain unchanged.
A new set of revised Profit Resource Rent Tax (PRRT) rates will see the government take 15% more revenue, in the case of the most profitable fields.
“Royalty payments”
The maximum rate will be increased to 55% from 40%, with a system of “royalty” payments also introduced.
The new terms are not retrospective, and existing oil and gas fields will continue paying the lower rates.
The industry has so far reacted positively to the new measures, with the Irish Offshore Operators’ Association (IOOA) saying it will help Ireland develop a “competitive edge”.
“The success of exploration in the Irish offshore – which is currently in an embryonic state – is dependent on a fair, attractive, transparent and robust fiscal regime to encourage drilling and hopefully field development,” Professor Pat Shannon, chairman of the IOOA, said.
Attractive to industry?
He added that although the terms are less favourable than what is currently in place, “it should still attract industry”.
However, Sinn Féin’s Spokesperson on Natural Resources Michael Colreavy has highlighted that an Oireachtas committee recommended a top rate of PRRT of 80%, and that the terms “fall short of what is needed”.
Shell to Sea spokesperson Terence Conway criticised that Wood Mackenzie was chosen to carry out the expert report.
“As could be expected from a company so closely linked with the oil industry, the Wood Mackenzie report still recommends continuing to give the oil companies control over and the vast majority of the profits, from whatever oil and gas is found,” Conway said.
“The State will still take no share in production, and will have no control over what happens to our oil and gas, e.g. whether it is landed in Ireland or supplied to the Irish market.”
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