Michael Colreavy (Sligo-North Leitrim, Sinn Fein) | Oireachtas source

While it is true that the amount of oil and gas brought ashore has been small there is strong evidence that the reserves exist. At present very little gas and no oil is being extracted from Irish waters, however, the potential reserves exist, and perhaps more than that.

There are weaknesses in our regime and not just in the rate of taxation. Companies that discover oil or gas in Irish territory are not obliged to supply those resources to the Irish market. Not only that, our licensing terms are so weighted in the industry's favour that they do not require the companies to bring a single drop of oil or gas ashore in Ireland. Ireland's resources and our licensing terms do not award the country with fuel security. When the Government awards an oil or gas company a licence, ownership and control of Irish oil and gas is transferred to that company and under the current licensing terms, the Government cannot guarantee that the oil and gas will be sold to the Irish market, landed in Ireland or that the companies would even use Irish workers. Irish consumers would still continue to pay the full international price for the oil and gas found off Ireland's coasts. It is difficult to see where our present licensing system gives advantage to Ireland or to its people.

Under the 1992 and 2007 licensing terms, a 25% tax on net profits from oil and gas is applicable. However, oil and gas companies can write off 100% of costs against tax, including costs incurred up to 25 years before field production begins and the costs of unsuccessful wells drilled anywhere in Irish waters in that 25 year period. Under the 2007 licensing terms, a profit resource rent tax, PRRT, was introduced. PRRT is payable on a profit ratio calculated by the cumulative after-tax profits on the specific field divided by the cumulative level of capital investment on the specific field. Oil and gas companies may be subject to pay PRRT on after-tax profits of between 5% and 15%, which means that an oil and gas company could pay up to 40% tax on their profits. However, in reality, only the largest of oil and gas explorations and finds would pay the higher tax and small and medium size fields would pay little or no PRRT.

Compared with international standards, Ireland's licensing terms are extremely generous to oil and gas companies. In 2007 the United States Government Accountability Office, USGAO, studied the licensing terms of 142 fiscal systems. The USGAO report, on foot of that study, found that Ireland has the second lowest government take of all the countries studied. In the United States there is a minimum government take of 42% and in Norway the government take amounts to 75%. While acknowledging the point-----

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