Arthur Morgan (Louth, Sinn Fein)
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Question 93: To ask the Minister for Communications, Energy and Natural Resources if his Department have conducted research into the likely revenue that would accrue to the Exchequer if oil and gas exploration companies were subject to the same taxation and royalties as in Norway. [35174/07]

Eamon Ryan (Dublin South, Green Party)
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The Deputy will be aware that in August of this year I announced revised licensing terms for oil and gas exploration and production. The Government decision to revise the fiscal licensing terms followed an independent review that included a comparative analysis of eight other exploration areas, including Norway. That review had regard to energy prices, water depths, operating and capital costs, along with the key consideration of Ireland's relative prospectivity as a location for exploration investment. The review recommended that Ireland's fiscal terms should be revised to provide for a higher tax take in the case of more profitable fields while holding the tax take at 25% in the case of more marginal fields. The Government decision provides for a tax take of up to 40% in the case of more profitable fields.

Having regard to the findings of the review that was completed earlier this year, I consider that introducing the Norwegian tax rate of 78% in Ireland in this sector, would result in no future applications for exploration licences, as the risk involved would be considered by the industry to be far too high. This would result in no new discoveries and as a result no tax return to the State. Adopting the other element of the Norwegian model, the rebate on unsuccessful wells, might encourage exploration. This would mean, however, that the Irish taxpayer would in fact pay the majority of the cost of unsuccessful exploration wells. This would, in my view, place an unreasonable burden on the Exchequer as a single deepwater well in the Atlantic can cost in the region of €100 million. I am of the view that it is the industry and not the State that should take the risk associated with investment in exploration for oil and gas.

I am satisfied that Ireland's revised licensing terms strike the right balance given the current record of success from exploration in Irish waters. The revised licensing terms are designed to attract what is mobile international investment, while ensuring a fair return to the State for its natural resources.