Brian Stanley (Laois, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

287. To ask the Minister for Communications, Energy and Natural Resources the revenue that would be raised by increasing the taxes on exploration and drilling for oil and gas by 1%, 2%, 3%, 4%, 5%, 10%, 15%, and 20%. [14177/16]

Denis Naughten (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

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 and the Corrib producing gas field off the coast of Mayo. There have been no commercial discoveries of oil to date

Profits from the three Kinsale Area gas fields and the Corrib gas field 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 nor from the Corrib gas field as Ireland moved from a royalty based payments system to a tax based system in 1987.

The rate of tax that will apply to profits arising from any future commercial discoveries made under an exploration licence or licensing option granted prior to January 2007 will be 25%.

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.

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. In addition there is a requirement for a minimum tax payment at a rate of 5% of gross revenues in every year that a field is selling production.

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, or projected under hypothetical scenarios, to the Exchequer in respect of the four commercial gas fields. In the case of existing exploration licences where exploration is ongoing, while we would hope for more commercial discoveries, it would not be possible to meaningfully estimate 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.