Taxing issues for offshore oil firms
Madam – Eddie Hobbs in his article on offshore exploration (Sunday Independent, March 2, 2014), questions Ireland abolishing royalties in 1987. The fact is that royalties are a very inefficient way of taxing high-risk offshore projects. For that reason, they were abandoned by the UK in 1982 and by Norway in 1985. Ireland followed suit in 1987, as did the Netherlands and Denmark.
We should also ask, if the changes to the Irish licensing regime in the Eighties were so undesirable, why no minister has made any significant move to reverse them over the past 30 years? Could it be that successive governments took the position that the terms were appropriate, based on the low level of exploration offshore Ireland for the past 25 years?
He also says "the official government estimate of the value of Irish oil and gas underneath territorial waters at current pricing is about a trillion euro". There has never, to my knowledge, been an "official government estimate of the value of Irish oil and gas" such as he suggests. What he may be referring to is that, some years ago, the Department of Communications, Energy and Natural Resources stated that the "potential, yet-to-find" reserves for the Irish offshore was 10 billion barrels of oil equivalent.