Alex White (Dublin South, Labour)
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I propose to take Questions Nos 628 and 632 together.

Following on the Dáil Éireann debate on the 9^thof July 2013 on the May 2012 Report of the Joint Oireachtas Committee on Communications, Natural Resources and Agriculture on Offshore Oil and Gas Exploration, Wood Mackenzie, a UK based international advisory services company specializing in the energy, metals and mining sectors, were engaged as independent expert advice to advise on the appropriateness of Ireland's oil and gas fiscal terms.

In undertaking their review Wood Mackenzie sought to take account of the need to strike the necessary balance between attracting the high-risk exploration investment needed to prove the potential of the Irish Offshore and maximising the return to the State from Ireland’s natural resources. Wood Mackenzie furnished their Final Report at end May 2014.

The principal recommendations made by Wood Mackenzie were as follows:

-For now Ireland should maintain a concession system with industry rather than the State bearing the risk associated with investing in exploration;

-Going forward a form of production profit tax should continue to apply in Ireland, but for discoveries made under future licences the form of this tax should be revised;

-The tax should be charged on a field-by-field basis with the rate varying according to the profitability of the field and charged on each field’s net profits;

-That the revised tax should include a minimum payment 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;

-That the revised tax rates should be higher than the Profit Resource Rent Tax currently in place, thereby ensuring a higher share for the State from the most profitable fields. This would result in a maximum rate of 55% applying in the case of new licences, compared with a maximum rate of 40% under the current fiscal regime;

-That the corporation tax rate applying to petroleum production should remain at 25%;-That the existing licensing terms (duration of licences, work commitments etc.) remain intact as they appear ‘fit for purpose’ and are comparable to those available in other countries with high exploration risk;

-That the use of production sharing contracts or mandatory state participation in licences would not be appropriate at this juncture in the development of the Irish Offshore.

-That the Government should consider the potential role a National Oil Corporation might play in the development of the Irish Offshore taking into account stakeholder views.

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

A Steering Group, with representation from the Department of Finance, my Department and the Revenue Commissioners, has been tasked with preparing proposals to give legislative effect to the approach recommended by Wood Mackenzie and is currently progressing same, and that the necessary revisions would be effected by way of the Finance Bill 2015.