Pat Rabbitte (Dublin South West, Labour)

I welcome the opportunity for the House to hold an informed discussion on the question of the tax terms that apply to petroleum production in Ireland. The Private Members' motion proposed by Sinn Féin, which is along the same lines of some earlier commentary in the House and in the media, clearly demonstrates the need for a well informed debate on this subject. Too often, public discussion of Ireland's tax terms relating to the production of oil and gas is informed by a gross misunderstanding or, perhaps, a misrepresentation of the facts. In my contribution, I intend to focus on the facts and the realities. I will convey to the House the rationale underpinning Ireland's fiscal terms for oil and gas production and I will demonstrate why Ireland's existing terms are appropriate for now. I will present the facts which demonstrate why, from an exploration perspective, the Irish offshore should be differentiated from the offshore of the UK or Norway. I will address the developing myth that a simple change to Ireland's tax policy in this area could be a panacea for all the challenges faced by our economy.

I wish to address the last point first. As I stated, there is a developing myth that Ireland has vast discoveries of oil and gas off our shores and that imposing a higher rate of tax on the production of these petroleum resources would eliminate all of our financial worries. Unfortunately, the reality is quite different. There is periodic publicity and not infrequent misrepresentation about a research finding from a study sponsored by my Department which estimated there could be in the order of ten billion barrels of oil equivalent in the Irish offshore. This is an estimate of the yet-to-find potential of the offshore frontier basins west of Ireland and is based on petroleum systems studies. It is an estimate of what might be present based on geological criteria and regional comparisons. Some commentators have chosen to represent this estimate in a manner that would suggest this volume of oil and gas had actually been discovered offshore Ireland. Clearly, this is not the case and it is misleading to suggest otherwise. To do so is to ignore the fact that this is simply an estimate of what may be out there but has yet to be found. It also ignores the fact that it would take hundreds or thousands of exploration wells to discover if the estimate is accurate. Also, it ignores the fact that even with an intensive and expensive exploration effort, the benefits that would accrue to Ireland would only be realised ten, 15, or 30 years from now.

The cost of drilling even 100 exploration wells in the Atlantic could be well in excess of €10 billion. Deputy Ferris argues for a more proactive role by the State but at €80 to €100 million spend per hole drilled I am unsure where the money could be found for that at this time.

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