Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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To ask the Minister for Communications, Energy and Natural Resources the tax percentage the State would take from a company (details supplied) following oil extraction from the proposed site off Dalkey, County Dublin; and if he will make a statement on the matter. [53500/12]

Fergus O'Dowd (Louth, Fine Gael)
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Standard Exploration Licence 2/11, which was issued last year, is held by a consortium comprising Providence Resources Plc and PSE Seven Heads Ltd. over an area of approximately 380 square kilometres in the Kish Bank Basin off the Dublin-Wicklow coast.

The licence is for a six-year period with an obligation to drill an exploration well by August 2014. The licensees have not as yet submitted detailed proposals for drilling to my Department for approval and at this early stage of exploration activity it is far too soon to anticipate a commercial discovery that could potentially lead to a petroleum production project. In the event, however, that the proposed drilling on the licence was successful and resulted in a commercial discovery, profits would be subject to a tax rate of between 25% and 40%, depending on the profitability of the field.

Ireland's tax terms for oil and gas exploration and production are set at a level which seeks to maximise the financial return to the people of Ireland from our indigenous oil and gas resources while at the same time encouraging exploration companies to invest in exploration in the Irish offshore.

Ireland’s tax rate for oil and gas production is set at a level similar to countries such as France, Portugal and Spain which, like Ireland, have limited petroleum production and with which we compete for investment, rather than at a level comparable to countries such as the UK and Norway which are major petroleum producers.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Sometimes I wonder why people and parties which have good plans and policies, as soon as they enter government with a larger party have those good plans and policies watered down. I do not know whether it happens during the negotiations around forming the Government or if it is a question of continuing as before with the Civil Service; that phenomenon could probably be called civil subservience. However, the Minister will recall that in the 1970s there was an active campaign seeking reform of the tax take from oil and gas.

A former Labour Party Minister, Mr. Justin Keating, introduced a 50% maximum stake in any commercial find, production royalties of 8% to 16% and bonuses on particularly significant finds. These terms were dismantled by Mr. Ray Burke and Mr. Bertie Ahern-----

Michael Kitt (Galway East, Fianna Fail)
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A question, please.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I am aware that the Joint Committee on Communications, Energy and Natural Resources has issued a report on a pricing structure for oil and gas finds. When does the Minister propose to implement it, or does he propose to do so?

Fergus O'Dowd (Louth, Fine Gael)
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The joint committee published its report on offshore oil finds in May. The report recommends an increase in the tax rate to 80%, but it does not address the continuing low level of offshore exploration and makes no suggestion on how it can be improved. It also makes it very clear that even if there were to be changes from its perspective, they could not apply retrospectively.

The key point I would make to the Deputy is that we have had something like 146 wells drilled off the Irish coast to date compared to over 4,000 in the United Kingdom and over 1,200 in Norway. We have to compete with these countries to get companies to come here to find oil and gas and exploit it and bring it ashore. The reality is they are not investing here compared to the level of investment in other countries where there is certainty of finding oil. We have to attract them to come here. The big bonus, if and when oil and gas are found, is the spin-off to the economy in terms of job creation.

This is the best deal we have available. We believe it is at the right level to attract more companies to prospect for and find oil and gas. Our terms are comparable to those on offer in other countries such as France, Spain and Portugal and we have exactly the same take.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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The Minister of State is as aware as I am that the jobs, income and oil security promised in the non-negotiations in this development are illusory. All exploration costs can be written off against any tax rate we set. Surely, we need to button down our expected return from these companies. We need to know in advance that this return will be made. Otherwise, we are risking our environment and people's enjoyment of life for very little or no return.

Fergus O'Dowd (Louth, Fine Gael)
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I reject all of those assertions because they do not make sense. As I said, we have had a very small number of drills off our coast compared to the numbers in Britain and Norway because of the fact that there is a much better chance of finding oil off their shores. We have to get companies to invest here and we are getting them. However, during the years, the graph showing the number of companies coming here has not gone up but down. We want companies to come here, but they will not come if there is an 80% tax regime in place because there is no certainty of finding oil and gas and there is a much greater certainty of finding them at other locations. We have to be in the marketplace to attract them. There are companies which I hope, will find oil next year. However, we do not know if they will do so and they do not know either. It costs at least €60 million to drill a well. We have to provide the seismic knowledge they need. In that regard, a major seismic survey will take place on the Atlantic margins in the next two years. It will inform companies in the next Atlantic margins round and I hope as a result that more companies will come here to drill.