Mulherin welcomes increased taxation from petroleum exploration

Fine Gael Deputy for Mayo and Chair of the Fine Gael Internal Committee for Communications, Energy and Natural Resources, Michelle Mulherin, has today (Thursday) welcomed the new taxation system for the revision upwards of the taxation of future petroleum and gas exploration and production in the State and its territorial waters announced by Minister Pat Rabbitte. The new system will provide for an increased financial return to the State from discoveries made under future exploration licences and licensing options.

“I welcome the new regime which will help bring extra revenue to the country from our extremely promising petroleum resources. The decision was informed by a report produced by international energy experts, Wood Mackenzie. I have consistently argued that there is scope for an increase in the overall State take from petroleum exploration and extraction and I am glad that Minister Rabbitte has concurred.

“This new regime will also help ensure an earlier share of revenue for the State; and will help address inconsistencies in the current fiscal system as identified by Wood Mackenzie. I agree with the principal recommendations made by Wood Mackenzie including that Ireland should maintain a concession system, with industry rather than the State bearing the risk associated with investing in exploration; and that going forward, a form of production profit tax should continue to apply in Ireland, but the form of this tax should be revised for discoveries made under future licences.

“In the future we should take a flexible approach as our economic situation improves and as more empirical data on the extent of our resource becomes available, the government could look at joint ventures with exploration companies in the future. Also instead of just piping out oil or gas we should look to developing industry around the location of a find for example the setting up of a liquid petroleum gas processing operation beside a gas find. This would maximise the benefit to our State from such finds.

“As things stand we import all of our oil from abroad. With energy security an increasingly pertinent geo-political issue (we import about 90% of fossil fuels) ensuring our own supply of oil and gas would be extremely beneficial to Ireland. This independent report by Wood Mackenzie commissioned by Minister Rabbitte will help to ensure we get our fair share as a nation for oil and gas exploration from investors. I would hope that the new licensing terms will strike the right balance between encouraging exploration and getting a fair return for the State.

“For existing licences, no changes are proposed. For future prospective licence holders, a new regime is being set out and the rationale for that regime has been clearly outlined. I believe this will generate confidence in the stability of the fiscal terms for Ireland’s oil and gas resources. We have to realise our oil and gas potential and need to increase the level of exploration in order to achieve this. Providing certainty on fiscal terms will help the oil and gas industry make important decisions in this regard.”