Pat Rabbitte (Dublin South West, Labour)

The total volume of sales of gas from the Kinsale and Ballycotton gas fields is approximately 1.75 trillion cubic feet since production started in 1978. Royalties from the two fields are payable to the State at a rate of 12.5% of the fair market value of gas at the well head. The amount received in royalties to date is just over €190 million. The total volume of sales gas produced from the Seven Heads gas field, since production started in 2003, is 0.025 trillion cubic feet. Royalties are not payable on production from the Seven Heads gas field as Ireland, following the lead of counties such as Norway and the UK, moved away from a royalty-based payments system to a tax-based system in 1987. The Kinsale area gas fields are nearing depletion and gas production is currently running at approximately 0.01 trillion cubic feet per annum.

The amount paid in tax is a matter between the operators of the gas fields and the Revenue Commissioners. However, for the information of the Deputy, the combination of tax, royalties and rental fees currently provides for a State take of 40% of net income.

On a more general and forward-looking note, the rate of tax that will apply to any future commercial discoveries made under an exploration licence granted since the Finance Act of 2008, will be between 25% and 40%, depending on the profitability of the field. The fiscal terms in the Finance Act 2008 were introduced following a review of the licensing terms by my predecessor and that was informed by a report from expert economic consultants. The fact that the Kinsale area gas fields are nearing depletion at a time when Ireland's only other commercial discovery, the Corrib gas field, is still in development phase, is another clear indicator of why Ireland needs to encourage an increase in the level of exploration investment and exploration activity.

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