State could net €11bn taxes from Providence discovery
Providence Resources' bumper oil find at Barryroe off Cork may now contribute as much as €11bn in taxes to the Irish economy after estimates of the amount of oil that could be retrieved from the field soared dramatically last week.
Initially, Providence boss Tony O'Reilly Jnr had expected that the State could earn "between €5bn to €6bn" in a windfall in taxes from oil production at Barryroe. These tax estimates were based on Providence being able to recover just 16 per cent of the oil at Barryroe. However, last week expert analysis revealed almost double that amount was now likely to be retrieved from the field.
Industry estimates suggest that the field could produce 27m barrels of oil per year, which would generate around $475m (€360m) in tax for the State every year for the 25-year lifespan of the field. This is based on a special low tax rate of 25 per cent. However, Ireland's tax regime has a special "windfall" kicker, which may see extremely large finds taxed at 40 per cent. This could bring the total tax take up to €11bn over the next 25 years.
Providence owns 80 per cent of the Barryroe oil field with Lansdowne Oil & Gas holding the remaining stake.
The sheer scale of the Barryroe oil find has the potential to dramatically alter the size of Ireland's economy and help create a brand new oil industry on the south coast.
Sunday Indo Business