Minister for Communications Pat Rabbitte has said an examination of tax rates for oil and gas exploration was being done to try to attract more investment offshore to increase the level of prospectivity.

Mr Rabbitte said he did not think Ireland was very much out of line with other countries in terms of rates and he said very high rates would deter exploration.

Speaking on RTÉ's Morning Ireland programme, Mr Rabbitte said the alternative of setting up a State exploration company was not possible as Ireland did not have the money.

Mr Rabbitte’s comments came as Sinn Féin proposed new legislation seeking up to 80% tax on major Irish oil and gas discoveries.

Sinn Féin spokesperson for Communications, Energy and Natural Resources Michael Colreavy said the party favoured a new tax regime which collected a graduated range of higher taxes from companies involved in oil and gas production but which did not discourage other companies which specialised in exploration.

Under Sinn Féin's plan, taxes on petroleum finds would rise depending on the size of the energy discovery.

Ireland currently applies a 25% corporation tax levy on petroleum firms while oil and gas field profits are hit with a graduated series of tax bands from 0-15%.

Mr Colreavy said that the party had not fixed a specific value for a major discovery. The proposed tax increase would not be retrospective and would only apply to future petroleum finds, he said.