Pearse Doherty (Donegal South West, Sinn Fein)
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433. To ask the Minister for Communications, Energy and Natural Resources the partial and full year revenue that would be raised for the Exchequer by extending the findings of the Wood Mackenzie report, which the Government plans to apply to new licences issued for exploration, resource drilling and so on, to existing licences. [31223/14]

Pearse Doherty (Donegal South West, Sinn Fein)
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434. To ask the Minister for Communications, Energy and Natural Resources the current taxes applied to exploration/drilling activities for natural resources in Ireland and the revenue that could be raised for the Exchequer from increasing those taxes by 1%, 2%, 3%, 4%, 5%,10%, 15%, 20% respectively. [31224/14]

Alex White (Dublin South, Labour)
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I propose to take Questions Nos. 433 and 434 together.

There have been four commercial natural gas discoveries since exploration began offshore Ireland in the early 1970s, namely the Kinsale, Ballycotton and Seven Heads (Kinsale area) producing gas fields off the coast of Cork fields and the Corrib gas field off the coast of Mayo. There have been no commercial discoveries of oil to date.

In terms of the direct financial contribution to the State, profits from the three Kinsale area gas fields are taxed at a rate of 25%. In addition royalties from the Kinsale and Ballycotton gas fields are payable to the State at a rate of 12.5% of the fair market value of the gas at the well head. The combination of tax, royalties and rental fees currently provides for a State take of 40% of net income from these two fields.

Royalties are not payable on production from the Seven Heads Gas field or from future production from the Corrib gas field as Ireland moved away from a royalty based payments system to a tax based system in 1987. Profits from the Corrib gas field will be taxed at 25% when the field goes into production. The Corrib partners have indicated that the expected timeline for first gas is mid-2015.

The rate of tax that will apply to profits arising from any future commercial discoveries made under an exploration licence or licensing option granted from January 2007 to May 2014 will be between 25% and 40% depending on the profitability of the field.

Under the Wood Mackenzie recommendations the rate of tax that will apply to profits arising from any future commercial discoveries made under an exploration licence or licensing option granted from June 2014 onwards will be between 25% and 55% depending on the profitability of the field.

The level of profits arising from a field depend on a combination of factors including, the volume of recoverable gas or oil, the cost of developing and operating the infrastructure, the price of gas or oil over the life of the field, together with the timing and profile of production.

The operation of the taxation system and the receipt of taxation are matters for the Revenue Commissioners. As a consequence I am not in a position to provide the Deputy with the current position as regards tax paid or due to the Exchequer in respect of the Kinsale, Ballycotton and Seven Heads (Kinsale area) fields, nor to provide estimates of how such a position might alter under hypothetical increased tax rates. In the case of existing exploration licences where exploration is ongoing, while we hope for more commercial discoveries, there is little point in speculating about potential revenues from oil or gas fields that have yet to be discovered.

I would also point out that it is both Government policy and the view of the former Joint Oireachtas Committee on Communications, Natural Resources and Agriculture, as expressed in their May 2012 report on Offshore Oil and Gas Exploration, that there should be no “retroactive” changes applying to discoveries made under existing exploration authorisations.