Clare Daly (Dublin North, United Left)
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941. To ask the Minister for Communications, Energy and Natural Resources the way the increased financial return to the State from discoveries made under future exploration licenses and licensing options, as announced in June 2014 (details supplied), will be monitored; and the way the current and future returns can be scrutinised by Dáil Éireann. [11385/15]

Alex White (Dublin South, Labour)
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During the course of the Dáil Éireann debate on the 9th of July 2013 on the May 2012 Report of the Joint Oireachtas Committee on Communications, Natural Resources and Agriculture on Offshore Oil and Gas Exploration, my predecessor indicated his intention to seek independent expert advice on the “fitness-for-purpose” of Ireland's oil and gas fiscal terms.

Following a public procurement process, Wood Mackenzie, a UK based international advisory services company specializing in the energy, metals and mining sectors, were engaged to advise on the appropriateness of Ireland's oil and gas fiscal terms. Wood Mackenzie furnished their Final Report to my predecessor at end May 2014.

In June 2014 Government approval was received to revise Ireland's oil and gas fiscal terms along the lines recommended by Wood Mackenzie.

A key recommendation of Wood Mackenzie was that the fiscal terms applying in respect of new petroleum authorisations (which include licensing options and exploration licences) should be revised to ensure a higher share for the State from the most profitable fields should commercial discoveries of oil or gas be made at some point in the future. 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.

To achieve this higher share Wood Mackenzie recommended an increase in the marginal tax take from 40% to 55% (comprising corporation tax and a proposed petroleum production tax).

In addition Wood Mackenzie recommended that the revised fiscal terms should include a minimum payment (petroleum production tax) at a rate of 5% which would function like a royalty and would result in the State receiving a share of revenue in every year that a field is selling production.

It is intended to give operational effect to this approach in the Finance Bill 2015 with the revised fiscal terms applying to petroleum authorisations issued after June 2014.

The Wood Mackenzie Report and recommendations, and the Government response to same, were debated in Dáil Éireann on the 3rd of July 2014.

Application of the revised oil and gas fiscal terms as proposed for the Finance Bill 2015 will, on enactment, be a matter for the Revenue Commissioners.

I am informed that the Revenue Commissioners have a statutory obligation to observe confidentiality for taxpayers' information. However, mindful of this obligation, the Revenue Commissioners publish net tax receipts aggregated at a sectoral level in their statistical publications. Taxes relating to oil and gas production activities are usually recorded in such statistics within the category 'Mining and Quarrying'.

I am also advised that the Revenue Commissioners have a system of risk rating, and that all taxpayers, including petroleum exploration and development companies, are risk rated to ensure full compliance with the tax code.