Govt to hike tax on oil and gas discoveriesThursday 19 June 2014 11.52
The tax-take for the State from all future commercial oil and gas discoveries in Irish waters is to be increased.
While the basic tax rate of 25% remains the same, the top up tax rate applied to more profitable wells will vary from an additional 10% to 40%, but taken together tax will not exceed a maximum of 55%.
Minister for Communications, Energy and Natural Resources Pat Rabbitte said he will also introduce a new minimum payment tax rate of 5% every year for a well that is producing commercially.
This will ensure that the State gets a share earlier in the life of a commercial well.
He said the new terms will apply to all new exploration licences but will not affect licences already issued.
The changes recommended are all contained in a report from consultants Wood Mackenzie, which was commissioned by the minister.
Speaking on RTÉ's News At One, Mr Rabbitte said the new system would give certainty to investors and provide a stable framework to exploit resources offshore.
He said: "I think it is well-judged in terms of striking a balance between the State taking a larger share and the taxpayer taking a larger share and the regime not deterring investment - giving certainty to those who would drill.
"It costs in excess of €100m per well and the idea here is to provide a stable framework to exploit what we think are propitious resources offshore."
Mr Rabbitte said there are new opportunities for investment in Ireland's resources.
He said he is hopeful that certainty from new licences will improve Ireland's record of energy production.
He added: "We think the manner in which we have structured the licences and the data in our possession that it will be seen as attractive to the industry.
"They wanted certainty, they've now got certainty. The whole point is that against a poor record, over 40 years when we have had four gas producing fields and no oil find, that we can improve on that in the ten years ahead."