Pat Rabbitte (Dublin South West, Labour)

I stand corrected. If Senator Landy does not mind, I will give the eels a miss. On the LNG matter he raised, I can inform him that I sincerely hope and expect the regulator will announce a decision before the end of the month. It was delayed again, as the House will be aware because I was here recently, as a result of complaints lodged with Brussels but the expectation is that it will make the decision by the end of the month. I hope that will be good news for Tarbert and Kerry and for diversity and security of supply for Ireland.

I do not disagree with what Senator Whelan stated about the capacity of Bord na Móna, with thousands of acres of cutaway bog at its disposal, to deal with the water issue.

There is no fracking. That is important. There will not be any fracking until we have evidence-based advice available to us. I am sure most Members of the House agree with that. The EPA has made an initial report and the funding has been assembled to enable the EPA to conduct the kind of extensive study that would seek to allay the fears of people or produce scientific evidence on the practice by which Senators Mooney, MacSharry, O'Keeffe, Norris and Kelly can be assured, one way or the other. We do not yet have that scientific advice available to us. Indeed, it is not available elsewhere, although in certain states of the United States it has had the most dramatic impact on prices. Whenever we discuss the bigger picture, I will come back to that issue in terms of energy.

I will proceed to some of the more major points. First, I agree entirely with Senators MacSharry, Mulcahy and Whelan who stated that the issue is how to balance attracting investment and getting a return for the people. Senator Ó Clochartaigh advocates that I take a 51% stake and impose a tax level of up to 80% and he completely ignores the fact that there is no drilling going on. He stated that there are significant pay-offs which explains why exploratory drilling continues. Sadly, exploration drilling does not continue. There was one well drilled in 2011 and none so far in 2012. It is difficult to have this debate if, as Senator Ó Clochartaigh communicates to me, like some others, that he would be far happier going to bed at night in the comfort that we have a 51% stake in anything that is found, we have established a State oil company and we have an 80% tax rate, but we have no find. It seems to be entirely irrelevant that we do not make any find. The fact is we need the comfort blanket of saying: "By God, those large oil companies will pay through the nose if they come to Ireland." Sadly, they have not been coming to Ireland.

Senator Norris raised with me the Keating principles established in 1975. The expectation in 1975 was that, as a result of what Senator Terry Brennan described, Ireland would have an offshore experience similar to that in the North Sea. Sadly, this has not been the case and only one find, the Corrib field, has been made since. I do not propose to discuss the Barryroe field and ask Senator Trevor Ó Clochartaigh to bear with me in this regard because neither he nor I has information from that field yet. I wish the company involved every success and will await the outcome of drilling there. The position remains that the Corrib field is the only find made since 1975.

I have genuine difficulty understanding how anybody can argue with the necessity to increase economic activity by attracting companies which will carry out exploration and drilling. Without them, we will not find whatever oil or hydrocarbons are in our waters. Senator David Norris spoke of there being 10 billion barrels of oil in Irish waters. We do not know if that is the case because it is an unproven, unestablished figure that featured in a report on potential oil finds in Irish waters. I sincerely hope 10 million barrels are available, but we must first find them.

Ireland does not have sufficient investment capacity to establish a State oil company to drill empty wells at a cost of €80 million per attempt. We do not have that kind of money. The question is how one pitches a tax regime that is consistent with attracting serious players into our waters to undertake the drilling and prospectivity required. My mind is not closed in this matter and I am happy to listen to arguments in this and the Lower House about what should be done. However, the fact of the matter is that the Keating principles did not produce results and it was my colleague, Mr. Dick Spring, another Labour Party Minister who held office after Mr. Keating, who loosened the terms governing exploration in the mid-1980s precisely because we were not having any success.

I have been accused of many things but never of being on the side of the oil companies. If that is the way Senator Trevor Ó Clochartaigh wishes to see it, that is fair enough. Dick Spring was not on the side of the oil companies either when he made the decision he had to make in the mid-1980s. Unfortunately, we still did not get results. We heard a passing reference to the former Minister, Mr. Ray Burke, and innuendo and so forth. There is no evidence that less restrictive terms produced results in bringing oil companies flocking to our shores to engage in drilling on the Irish continental shelf or elsewhere in Irish waters. This brings us to the decision by the then Minister for Communications, Energy and Natural Resources, Mr. Eamon Ryan, to alter the tax base in the Finance Bill 2008 by implementing a sliding taxation scale ranging from 25% to 40%.

Senators who are also members of the joint committee did not take the opportunity to explain the reason they had selected Portugal and Norway as comparators. There are similarities with Portugal which has, from memory, a tax rate of 27%. The joint committee decided to recommend a tax rate of 80% which exceeds the Norwegian rate of 78%. Why did it compare Ireland with a country with which it did not have a similarity? If one drills an empty hole in Norwegian waters, one is refunded 78% of the costs incurred and the strike rate in Norway is beyond our wildest dreams. If we only had the Norwegian strike rate for one year, it would make a considerable contribution to resolving our current difficulties. I do not understand the reason the joint committee did not recommend adopting the Portuguese tax rate, as distinct from the Norwegian rate. It is the uniquely advantageous geological structure of Norway that produces its extraordinary strike rate. One could go into a Paddy Power office and place a bet on having one strike in four drills, whereas one could drill around the Irish coast for a long time before finding another Corrib field.

While I have not made up my mind on this matter, I have a genuine difficulty in understanding how it would be a source of comfort to some people or how they would sleep easier in their beds at night if we had a tax rate of 80%, took a 51% stake and did not find any oil or gas. I would prefer to find some gas, if it is to be found, and some of the 10 billion barrels of oil to which Senator David Norris referred. Let the Minister for Finance of the day then decide what he wants to do about it.

Senator David Norris has stated I appear to have set my face against retrospectively making changes to the tax regime. I remind the House that for reputational and other reasons the joint committee, in one of its 11 recommendations, proposes that I should not change the tax regime retrospectively. This is not my recommendation but one made by the joint committee. The Senator also made some sensible remarks. He has stated he does not mind with whom he is associated and that he will continue to support the Shell to Sea campaign. It is correct that the companies involved in the Corrib field took their eye off the ball and there were genuine local community interests which should have been addressed. Since that time, however, the State has bent over backwards in every way it can. In so far as it is known to man to make safe the bringing ashore of gas, this has been done. Uniquely on the planet, we are engaged in constructing a tunnel under Sruwaddacon Bay at a cost of €400 million. What else can one do to improve the safety prospects locally? The €400 million cost will be written down against the costs of developing the field, which means the Exchequer must forgo €100 million in taxation. This cost is only a small element of the difference between the €1 billion anticipated cost of bringing the gas ashore and the €3 billion costs incurred as a result of delays. This is supposed to be a victory for the people. Is it a patriotic achievement that the project has cost €2 billion more than anticipated, that immense reputational damage has been done to Ireland abroad and that we have not yet brought ashore one cubic centimetre of gas? Something about the sea brings out a soft-headed romanticism in Irish people with which I find it very difficult to deal. We are either serious or not about exploiting an indigenous resource that may be available but difficult to find and achieving from it the optimum benefit for the people. I hope we can also develop an industry in the process.

Senator Marc MacSharry counselled a joint venture. If we have an industry and make a number of finds, that appears to be a sensible approach to take. However, we are trying to get companies with expertise, deep pockets, skills and a track record to engage in prospecting and drilling off the Irish shoreline. We could very well do with a find. Three finds since the days of Justin Keating is a very poor return, especially when compared with the endless finds made off the coast of Norway and elsewhere. This is the comparison that must be made and I am glad of the opportunity to start this debate because the report from the joint committee deserves to be debated in both Houses. Members should regard this as the beginning of this debate. I do not have a closed mind on it but people who have definite views on this matter must deal with some of the questions I have raised because I have practical decisions to make. The decision is whether to frighten off any prospect of drilling off our shore or whether I should be persuaded to impose a tax regime that has the probability of attracting heightened economic activity off our shore and, hopefully, the better prospects of making a find in the interests of the people.