A JOINT OIREACHTAS COMMITTEE has compiled a report recommending the introduction of clear and transparent legislation concerning offshore petroleum exploration in Ireland, and changes to the current tax regime concerning oil finds.
The committee says that while existing agreements and licenses should be adhered to “irrespective of changing circumstances”, future agreements should reflect changes in police and circumstances, such as the discovery of a number of commercially-viable oil finds:
Any future changes to the fiscal terms should be clarified before subsequent licensing rounds to ensure certainty around the regime for the investing companies.
The report also recommends changing the taxation system concerning the discovery of petroleum fields.
“The State should seek to maximise tax revenues from petroleum exploration and production without deterring petroleum investment,” the committee report says.
“In this context, the Joint Committee believes that the overall tax take should, in the
case of future licenses, be increased to a minimum of 40 per cent. The PRRT should increase from existing levels according to a sliding scale based on the rate of profit (ie to give an overall tax take of 40 per cent for small commercial discoveries, 60 per cent for medium commercial discoveries and 80% for very large commercial discoveries).”
The Oireachtas committee also calls on the Minister for Natural Resources Pat Rabbitte to establish a forum with key stakeholders “to improve communications between stakeholders and maximise the potential for Ireland’s hydrocarbon resources for the benefit of all Irish people”.
Then, in consultation with this forum, the government should develop a policy to ensure employment opportunities arising from these resources are maximised within Ireland.
Here are the report’s other main findings:
- There should be a clear and comprehensive process of public consultation at the first substantive stage in offshore oil and gas exploration, such as when the plan of development is being drawn up
- Consideration should be given to the prohibition of flaring of gas
- Fiscal and licencing  terms should be kept under constant review by the state
- The state should consider applying the principle of ‘unitisation’ to future explorations activities; the benefits of having at least two participants in a license area should be fully explored and considered
- There should be a statutory commitment that qualifying local communities affected by offshore oil and gas exploration shall be compensated financially through infrastructural and social development
- The Minister for Communications, Energy and Natural Resources draw up a strategic policy document for petroleum exploration
- The minister should also consider engaging with other countries, such as Norway and Portugal, with a view to establishing a forum to exchange ideas on best practice on various aspects of petroleum exploration and production
- The government should consider methods of controlling production volumes under resource management, such as the Norwegian method of employing permits to ensure a flat production rate so that as much as possible is produced from a field
A copy of the report is being sent to Minister Pat Rabbitte for his consideration. Speaking in the Dáil recently, Rabbitte said he would participate in a debate on the report’s findings – if the whips facilitate it.
Committee chairman Andrew Doyle TD said the group’s focus was on how to best develop Ireland’s offshore resources while taking affected communities into consideration:
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READ the Committee report in full >
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