Hopes rise as exploration companies step up their activities off Irish coast
However, if the oil and gas giant were to find that the basin holds commercial hydrocarbons, Teeling could well find a few people knocking on Petrel’s door. He and a lot of others in the industry will be paying close attention to Exxon in 2013.
Money trail: What the State gets
The Republic has one of the “most favourable” fiscal regimes for oil and gas exploration in the world, largely because the industry has not shown huge interest in coming here in the first place.
As things stand, profits from oil and gas production in the State’s territory are taxed at 25 per cent, twice the standard corporate rate. The charge could potentially rise to 40 per cent if the licence turns out to be particularly lucrative.
Pat Rabbitte, the Minister for Communications, Energy and Natural Resources, has defended the current system, pointing that the State simply cannot afford to invest the vast amounts of money needed to explore for oil and gas in its own waters and risk getting nothing in return.
The Government could well come under pressure to look again at the rules if current prospects start to deliver.
At a recent briefing, Fastnet Oil Gas suggested adopting the Moroccan model. Under this, the State gets a free 25 per cent carry in all licences, up to the point that the resource is proven and development and production is ready to begin.
At that stage, it invests its share of the development costs, which it can borrow, securing the debt against the asset itself.
In return, it gets a 25 per cent share of the profits in the same way as any shareholder. At the same time, it also gets tax and royalty payments.
Under such as system, it may have to keep the tax rate at 25 per cent as well.
At least some civil servants in Mr Rabbitte’s department are said to be taken by the idea.
Know the drill: Who's who in energy exploration
* Dragon Oil: Headquartered in Dubai and listed in Dublin, Dragon’s main asset is the Cheleken contract area in the Caspian Sea.
* Kenmare Resources: Irish headquartered and Dublin-listed, Kenmare operates the Moma titanium feedstock mine on the coast of Mozambique.
* Ormonde Mining: Irish-based and listed, Ormonde is focused on tungsten, copper and gold, with three assets in western Spain, Barruecopardo, La Zarza, and Salamanca and Zorza.
* Petroceltic: Dublin- and London-listed Petroceltic has interests in Algeria, Egypt, Bulgaria, Romania, the Kurdistan region of Iraq and Italy. Last week, the Algerian authorities approved its development plan for Ain Tsila, a large gas field in the south of the country.
* Petroneft: Petroneft has two licences in the Tomsk Oblast region of Siberia in the Russian Federation, from which it is producing oil and where it has an ongoing exploration programme.
* Tullow Oil: Tullow has grown to near major status on the back of its success in Africa, where it has onshore and offshore licences right a long the coast and a significant interest in the Lake Albert rift basin in Uganda.
It operates the Jubilee field off Ghana’s coast, which is on track to produce 120,000 barrels of oil a day next year. It has begun exploration work off the Atlantic coast of South America and is also poised to expand into Norway following a recent deal.
It has a Dublin office and a significant hub in Sandyford. Its main listing is in London.