Coalition to review tax on oil, gas exploration
THE Government is seeking advice once again on the taxes levied on oil and gas drilling after years of lacklustre interest from mining companies.
It is advertising for consultants to help determine whether current policies are attractive enough for drilling companies. It did something similar last September but failed to secure advisers.
The new call comes just 18 months after a joint Oireachtas committee produced its own extensive analysis of the subject, which has emerged as a political hot potato following repeated clashes between environmental activists and drilling companies.
Oil and gas mining companies are currently charged a maximum of 40pc tax on any profits from drilling.
But in May 2012, the joint Oireachtas committee advised that this be doubled to a maximum of 80pc for very large commercial discoveries.
The committee took into account the system applied in Norway, where an 85pc tax is levied on the profits of mining companies. However, Norway compensates drilling companies for 85pc of the cost of exploring, regardless of whether they are successful or not.
And Ireland has a much poorer track record when it comes to oil and gas discoveries than Norway.
Brian O'Cathain, chief executive of Dublin-based oil and gas company Petroceltic, said any upward revision of the tax rate would be "disastrous".
"You can't compare Ireland to Norway -- the success rate is much higher there. Ireland has had only three commercial discoveries of gas, and no oil, after 150 drilling attempts -- Norway is a completely different story, it has billions of barrels of oil and gas already discovered," said the chief executive. Petroceltic does not drill in Irish waters.
"Our fiscal terms are appropriate for a country that doesn't have much to offer in the way of oil or gas, and are similar to those in France, Portugal and Spain," he added.