Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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Question 24: To ask the Minister for Communications; Energy and Natural Resources when the promised review of the licensing and revenue terms governing oil and gas exploration will take place [6903/11]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Question 25: To ask the Minister for Communications; Energy and Natural Resources his plans to review the system of licensing for oil and gas exploration, development and production on Irish territory and waters, with a view to ensuring greater benefits for the Irish State; and if he will make a statement on the matter. [6732/11]

Pat Rabbitte (Dublin South West, Labour)
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I propose to take Questions Nos. 24 and 25 together.

While Ireland has recognised potential as a petroleum producing area, the Irish offshore is relatively underexplored. As a result, Ireland's petroleum potential is largely unproven. This is likely to continue to be the case until there is an increase in the level of Irish offshore exploration, exploration drilling in particular. Ireland competes with other countries in Europe and much farther afield to attract mobile international exploration investment. To this end, it is important that Ireland maintains a licensing regime that appropriately reflects the risks and rewards of investing in petroleum exploration in the Irish offshore relative to investing in exploration in other jurisdictions.

Regarding periodic publicity about Ireland's oil and gas resources, recent assessments of yet-to-find potential based on petroleum systems studies indicate a total reserve potential in the order of 10 billion barrels of oil equivalent for the offshore frontier basins west of Ireland. This divides approximately into 6.5 billion barrels of oil and 20 trillion cubic feet of gas. It should be understood that these figures only represent potential reserves, namely, the reserves that might be present based on geological criteria and regional comparisons, and that they have not been discovered. Actual reserve figures are likely to vary widely from these estimates and will not be known without a dramatic increase in the level of exploration activity.

A comprehensive review of Ireland's fiscal terms was carried out in 2007. This review, which was underpinned by independent economic analysis, considered the appropriateness of Ireland's licensing terms in comparison with other European countries with which Ireland competes for exploration investment. The review concluded that there might be potential to capture a higher share for the State on more profitable finds, but that the potential for this should not be overestimated. The outcome of the review was the introduction of a supplementary tax, known as a profit resource rent tax, of between 5% and 15% that will apply in the case of more profitable fields. The supplementary tax would be payable in addition to the standard petroleum corporate tax of 25%, which is double the standard corporation tax rate of 12.5%.

Since the review concluded in 2007, there has been no significant change in terms of the level of exploration activity and no new commercial discoveries have been made. The level of exploration activity will continue to be the critical factor in Ireland obtaining a benefit from our indigenous oil and gas resources. We need to get drilling levels above the recent levels of one or two wells per year if more commercial discoveries are to be made.

As part of an ongoing strategy to attract new companies and new investment, my Department is running a licensing round that is deliberately structured to attract new exploration companies. This licensing round, which closes at the end of May, also aims to encourage companies to look at areas of the Irish offshore where few data currently exist and, as a consequence, little is known of their potential prospectivity.

While I will keep the licensing terms, both fiscal and non-fiscal, under review in light of relevant future developments, at this juncture the focus should be on attracting a larger share of mobile international exploration investment to Ireland to increase the chances of new commercial discoveries being made.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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It is ironic that we are discussing Corrib at a time when it is in the news again for the wrong reason, namely, allegations about an audiotape of gardaí in the back of a car talking about the use of rape against two protestors. Equally disturbing if the contents of the audiotape are true, some of the commentary was derogatory towards protestors but favourable towards oil companies.

In the context of a review, will the Minister argue that the State should reinstate the type of fiscal regime put in place by the late Labour energy Minister, Justin Keating, in the 1970s? Under it, the State had holdings of 50% and between 6% and 7% in royalties. The Minister will probably remember how the stake was lowered by Dick Spring, but it was subsequently devastated by Ray Burke, who abandoned the State's share altogether. Does the Minister agree that, at a time when we are loaded down with an unpayable bank debt, the State should reinstate the sort of regime that Justin Keating put in place to ensure our people benefit from Corrib and other reserves when they come on stream? What is required is something that was advocated in the mid-1970s by one of the Minister's former parties, namely, Sinn Féin The Workers' Party. He might be able to correct me on the date. That party supported the objective of a resources protection campaign, something that was supported by members of the Labour Party.

In 1995, a group stated that a large area of the nation's offshore rights had been conceded for a pittance. Does the Minister agree that what was done at that point and in subsequent negotiations with oil companies has done significant damage to the potential resources off our north-west and west coast?

I have personal experience of working on the rigs on the Porcupine Bank. In 1978 and 1981 there were finds and the depth was approximately 1,600 ft., so they were not seen as commercially viable. The geology reports from the time indicated the finds could be substantial but because of the depth of water, the technology was not available at the time to access the resources and bring them ashore.

Pat Rabbitte (Dublin South West, Labour)
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I do not have any knowledge of reported stories concerning the protests at the Corrib field but I agree with the Deputy that the allegations are unedifying. With regard to the tax regime as applying to offshore prospecting, it is true that a different regime existed up to 1987, when it was changed. The change occurred because the expectations from the early 1970s were, unfortunately, not borne out then or since. Our strike rate is especially disappointing. Therefore, I fully endorse the current policy of trying to generate more activity in exploration.

Deputy Ferris would acknowledge that 25% or 55% of nothing is still nothing. If we do not bring about finds, the issue is entirely theoretical. Deputy Ferris advances the information that when he worked on the rigs, there were potential finds but the water was too deep for technology to exploit the resources at the time. Over the years the strike rate has been poor, although few holes have been drilled. We are trying to increase the rate of exploration activity.

Michael McCarthy (Cork South West, Labour)
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Deputy Boyd Barrett's name is attached to the other question and as there are just over two minutes remaining in the slot, I call Deputy Richard Boyd Barrett.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The petroleum affairs division, as mentioned by the Minister, estimates that 10 billion barrels of gas or oil equivalent are out there. We should be clear what is at stake. If that is anywhere even close to the mark, at current oil prices that would amount to €900 billion of gas and oil just off the west coast. One can consider that we have just borrowed €100 billion to bail out toxic banks and NAMA in a deal that will enslave this country to austerity, cutbacks and an unsustainable debt burden. Would it not be better to instead invest in developing resources and establishing a regime where we can get a reasonable benefit from the development and exploitation of those resources?

Is it a fact that we have one of the most pathetic arrangements for licensing, as we will get next to nothing? We have an arrangement where no royalties will accrue to this State from the development by multinational companies of our gas and oil resources. For all the bending over backwards we have done to facilitate Shell in its activities in Mayo etc., there is no security of supply. It does not have to supply to us if it does not want to.

Why do we not act like the Norwegians? That country has a 78% tax on profits made on oil resources in its territory and it owns 67% of Statoil, the national oil and petroleum company. The state jointly participates with multinational oil companies in the development and exploitation of those resources. It is shocking that the people of Norway will benefit more from the development of our gas and oil resources off the west coast of Ireland than we will. Should we not do something about it urgently? There are now reports of significant finds in Dublin Bay in the hands of more private companies but why are we giving away gas and oil resources rather than developing and exploiting them ourselves?

Pat Rabbitte (Dublin South West, Labour)
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Deputy Boyd Barrett only listened to half of the sentence. I stated that according to seismic data and available information, there is a "guesstimate" of 10 billion barrels out there. The problem is we have not found any of it. If Deputy Boyd Barrett can help us and point us in the right direction-----

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Shell has found some.

Pat Rabbitte (Dublin South West, Labour)
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-----I will join with him in reviewing the terms. We have not made the finds and in comparison to Norway, the strike rate in that country is beyond our wildest dreams. If a hole is drilled unsuccessfully in Norway, the state pays 70% of the cost, and if we were to do so here our financial position would be worse. What Deputy Boyd Barrett is not minded to accept is that what we are talking about is a potential reserve but we have not yet been able to find it. We are now engaged in a new licensing round calculated to bring in more companies with an exploration interest into this area of our offshore.