Oil and gas licensing review to study changes to fiscal regime

The Irish Offshore Operators' Association (IOOA) says it will "await with interest" the outcome of a new Government review of licensing terms for oil and gas exploration and production.

"It wouldn't surprise us to see the terms rejigged if there are major finds," Fergus Cahill of the IOOA said yesterday.

"We'd far prefer to be in a high-tax regime and finding oil and gas than in a low-tax regime, finding nothing," he added.

The review, confirmed in the Dáil last week by Minister for the Marine Noel Dempsey, has been welcomed by Independent Mayo TD Dr Jerry Cowley. The Minister said his department would be seeking tenders shortly to conduct the expert review of "proposed changes to the Irish exploration and fiscal production regime". No deadline has as yet been set for the review, according to the department.

The Minister was speaking during the debate on a private members' motion on natural resources, which was proposed by Dr Cowley on behalf of a group of Independent TDs.

The motion to replace 1992 fiscal terms with a "realistic tax take" on royalties and an automatic 50 per cent stake in any oil or gas discovery in Irish waters was supported by all Opposition parties including Fine Gael.

The motion was defeated last Thursday by 61 votes to 55.

The IOOA said it understood that such reviews were carried out periodically by the Government. Mr Cahill recalled that the last such public indication was made by former marine minister Frank Fahey in April 2001.

Mr Fahey had just visited a drill ship 100 miles off Donegal which was working for Enterprise Oil when he confirmed that a review of the 1992 terms would be conducted if there was a successful outcome to that year's oil drilling programme.

The IOOA said it understood that any such review would not be retrospective, as constitutional issues could arise. It would also not apply to the five current licensing applications for the Slyne, Erris and Donegal basins.

Dr Cowley said it was significant that one of the five applicants, the Donegal-based Grianan Energy, had offered to build a power station in Burtonport to bring gas ashore and use it to generate electricity for the national grid. Grianan Energy argues that this will be of greater benefit to the State and the local community than Shell's current plan for north Mayo. Shell is also bidding for the new round.