Fergus O'Dowd (Louth, Fine Gael)

Tááthas orm an deis seo a thógáil chun páirt a ghlacadh sa díospóireacht thábhachtach seo. Is ábhar tábhachtach é seo ar fad. Bíonn go leor plé sna meáin chumarsáide faoin ráta cánach a bhaineann leis an earnáil pheitriliam. Is maith an rud é go bhfuil an díospóireacht ar siúl anocht chun an cheist a phlé agus an t-ábhar a shoiléiriú.

Is léir dom go bhfuil ról tábhachtach ann don earnáil pheitriliam chun cuidiú le geilleagar na tíre sna blianta atá romhainn. Más rud é gur féidir linn níos mó a dhéanamh, caithfidh polasaí an Rialtais bheith docht daingean agus a chabhrú go mór leis na comhlachtaí atá sásta airgead a chur isteach sa tír seo chun an earnáil sin a thabhairt isteach.

Mar sin féin, is léir dom go bhfuil tráchtairí ann a thabharfaidh le tuiscint go bhfuil Éire ina suí ar shaibhreas ollmhór agus, mar thoradh, go bhfuil an ráta cánach ró-íseal. Ní aontaím leis an dearcadh sin ar chor ar bith.

I welcome the opportunity to contribute to this debate. Too often the debate on Ireland's tax terms for the production of oil and gas has been characterised by overly simplistic arguments. These arguments frequently have little grounding in fact and pay little attention to reality. On other occasions it is even worse and the debate can be characterised by misinformation and presentation that attempt to tell the Irish public that we are sitting on vast petroleum resources comparable to those being produced in Norway or the United Kingdom. The message being communicated is that all Ireland needs to do is increase the relevant tax rate, introduce royalties on petroleum production and all of our economic concerns will be at an end. If only there were such a simple answer.

While a line of argument such as that to which I refer may suit the objectives of some, it is not only unhelpful but has the potential to be damaging. Research sponsored by my Department has estimated the possible petroleum resource potential of Ireland's offshore. The purpose of that research was to assist Ireland's efforts to promote its offshore as a potential location for exploration investment. The research estimated that there could be reserves of up to 10 billion barrels of oil equivalent in the Irish offshore. Let me make it clear: this is an estimate of what might be present and is not based on actual discoveries already made.

There is no valid basis for making the jump from an estimate of what might be present to then treating it as if it were oil and gas that had already been discovered and could be produced. To do so is to totally misunderstand the research conclusions and ignore the significant and expensive exploration work that would be required to establish the veracity of the 10 billion barrel estimate.

As is often the case, the reality is less fantastic and may not suit the agenda of some people or parties. While the Irish offshore has recognised potential as a petroleum-producing area, it is relatively underexplored. It is an area where there has been relatively limited exploration and in which there have been only four commercial discoveries to date. As a result, the petroleum potential of the Irish offshore is largely unproven. This is quite the opposite to the experience in Norway and the UK. In those countries, extensive exploration, carried out over many decades, has clearly proven the existence of significant petroleum reserves.

Regardless of whether we like it, there is a fundamental difference in the position of Ireland and that of countries such as Norway and the UK. We would be better off if the reality was different and if Ireland was in a position similar to those occupied by Norway and the United Kingdom. The truth is that we do not have proven reserves of anything approximating the levels which obtain in Norway or the UK. As a result, Ireland could not impose a tax regime similar to those which hold sway in Norway and the United Kingdom and still hope to attract exploration investment. We have worked hard to build some modest momentum in exploration activity during the past decade. Imposing a tax regime similar to those which obtain in Norway and the UK at this point could be expected to wipe out all interest in exploration in Ireland overnight. It is quite obvious that this would not be in the national interest.

The following factors all contribute to the relatively low level of exploration activity in the Irish offshore - the international industry's perception of the prospectivity of the Irish offshore relative to that of other areas; the cost of exploring the offshore is high as a result of both its remoteness and deep water depths - in the Atlantic margin, water depths are seven to eight times greater than those in the North Sea; the cost of drilling a single deep-water well in the Atlantic can be in excess of €100 million; and limited availability of infrastructure, such as pipelines, terminals and platforms, increases development costs and impacts negatively on the commerciality of smaller marginal oil and gas discoveries.

Notwithstanding this, Ireland continues to attract new companies and new exploration interest. This is achieved through active promotion of the opportunities offered by exploration in a frontier area such as the Irish Atlantic margin. A key to this is the holding of regular licensing rounds. As the Minister stated, at the end of next month the 2011 Atlantic margin licensing round will close. This is the largest licensing round to date and relates to an area of just over 250,000 sq. km and includes all of Ireland's major Atlantic basins. The Atlantic margin licensing round is designed to: attract new exploration companies and new exploration investment to Ireland; encourage companies to look at areas of the Irish offshore in respect of which little data currently exists and little is known of their potential prospectivity; and bring a new momentum to the level of exploration activity offshore.

While informed debate is always positive and to be welcomed, overly simplistic contributions are unhelpful at a time such as this. If we are to be more successful in attracting international investment in respect of oil and gas exploration, we will achieve this by advancing our case on the basis of its being supported by science and reason. We can be more successful in this regard if we provide access to quality data and new ground-breaking research, coupled with a tax regime that recognises Ireland's attractiveness relative to other competing jurisdictions.

An unrealistic debate that is premised on the 1970s analysis of the Irish offshore being the new North Sea is not particularly helpful. Calls for the revocation of licences already granted do not help in building confidence in the stability of Ireland as a place for foreign investment. The message we must communicate is that from an oil and gas exploration perspective, Ireland is very much open for business. We must send a clear message that new exploration companies would be welcome and that there are good opportunities for investment in the Irish offshore. We must also communicate that key aspects of the regulatory regime governing oil and gas exploration and production have been modernised in recent years. We must also advertise the commitment in the programme for Government to further streamline that regulatory framework.

It is 15 years since the last commercial discovery was made in the Irish offshore. That is a negative factor in seeking to attract new companies to Ireland. We must send out a clear message. We require an approach that encourages more rather than less exploration in the offshore; creates certainty and not uncertainty; and ensures that the people of Ireland benefit from its natural resources. This Government is committed to acting in a way that will incentivise exploration for Ireland's indigenous oil and gas resources. Maintaining a balanced fiscal regime which reflects, in an appropriate manner, Ireland's relative attractiveness when compared to other countries is central to that objective. The current fiscal terms meet the objective to which I refer.

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