Jim O'Keeffe (Cork South West, Fine Gael)
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Question 36: To ask the Minister for Communications, Energy and Natural Resources the position and prospects for oil exploration off the coast; and if he will make a statement on the matter. [20947/08]

Seán Power (Kildare South, Fianna Fail)
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Ireland's offshore remains a relatively under-explored area with a history of poor prospectivity compared to other locations such as the North Sea. In order to change such negative perceptions, the Government has sponsored major resource assessments during 2005–2006, which indicate a yet to find reserve potential of between 8 and 10 billion barrels of oil equivalent.

This is the total combined quantity of potentially recoverable oil and/or gas (expressed as barrels of oil equivalent) indicated by these assessments for the Porcupine, Rockall, Slyne, Erris and Donegal basins, off the west coast of Ireland.

The figures are the output of regional geological studies into the petroleum systems which govern the presence or absence of oil and gas, and are based on the best available data and analytical methods. While the figures are indicative of the area's likely prospectivity, they relate to 'potential' and not to 'proven' reserves. The only way of determining actual reserves is to drill wells on prospects.

While this has assisted in encouraging new exploration, further work is needed to address the relative scarcity of geological and geophysical data over large areas of the Atlantic Basins. Additional acquisition of such data will reduce the perception that Ireland's offshore is a high risk exploration location.

Although potential has been demonstrated for both oil and gas offshore Ireland, it would require exploration drilling activity to be substantially increased to assess the reserves and the possibility of their commercial recovery.

There is evidence of a continuing upswing in the level of interest in exploration offshore Ireland, both in terms of the increase in the number of exploration authorisations awarded and in the number of major international companies applying for licences or buying into existing licences. Drilling activity, actual and scheduled, though fairly modest by international standards, is currently at its highest level in decades and is set to continue in the coming years.

Exploration investment has been encouraged through active promotion of the opportunities by my Department and the holding of regular licensing rounds. The next round will take place in the first half of 2009 in the Rockall Basin.

The tax regime applicable to oil production is a key factor in attracting internationally mobile exploration investment to Ireland. A comprehensive review of Ireland's licensing terms was carried out last year following which both the fiscal and non-fiscal licensing terms were revised. The revised terms will apply to all licences issued since 1 January 2007. The revised fiscal terms provide for a higher tax rate on more profitable fields, where the maximum tax rate is now 40% compared to 25% previously. The overall objective is to make Ireland's offshore sufficiently attractive to secure ongoing exploration investment while ensuring a fair return to the State.