“More funds for exchequer if oil and gas found”

Dublin, 7 October 2007

Today Minister Eamon Ryan announced the terms for a new oil & gas exploration licensing round in the Porcupine Basin.

The acreage on offer in the Porcupine Basin to the west of Ireland covers unlicensed blocks in an area of approximately 63,500 square kilometres.

Minister Ryan: Over the last decade our dependence on imported oil and gas has grown to over 85%. This reliance on imported fuels from areas of the world that are geopolitically volatile, contributes to price instability and vulnerability in Ireland. New domestic sources of oil and gas would ease this pressure.

As we approach a peak in oil finds, Ireland has become much more attractive to oil and gas companies.
I am pleased that finds under this licensing round could potentially yield much greater funds for the Exchequer. The change in the tax regime I announced in August will apply to Porcupine Basin finds.

Therefore, profitable fields will pay up to 40% in taxation to the Exchequer. That’s a top rate increase of 15% for the oil and gas companies involved.

Ireland’s oil and gas is a resource of the people. I want to ensure that our waters are fully explored and also that we get a proper return to the State.

In advance of decisions on the award of licences, a comprehensive Strategic Environmental Assessment (SEA) of the region is being undertaken by external environmental experts ERT and Aqua Fact, and the post-consultation report will be available shortly. The SEA will inform the industry of the environmental characteristics and sensitivities of the Basin, and will make recommendations to the Minister as to how these should be addressed.

Applications for Frontier Exploration Licenses covering blocks in the Round may be submitted up to noon on 18 December 2007. The Round will provide that applications may be made for a maximum of three blocks in the north of the Porcupine Basin and for a maximum of six blocks in the south of the basin.

The next exploration licensing round will take place in early 2009 in the Rockall Basin.

Ends

Notes to Editors:

Attached is a map showing the area that will be on offer under this round.

New licensing terms, including a profit resource rent tax, will apply to any finds made under this exploration round. This new tax will be in addition to the 25% corporate tax rate currently employed. It will operate on a graded basis of profitability as follows:

• an additional 15% tax in respect of fields where the profit ratio* exceeds 4.5
• an additional 10% where the profit ratio is between 3.0 and 4.5
• an additional 5% where the profit ratio is between 1.5 and 3.0
• no change where the profit ratio is less than 1.5

On our most profitable fields, therefore, the return to the State will increase from 25% to 40%.

2007 Porcupine Licensing Round Details

Licensing Terms for Offshore Oil & Gas Exploration, Development and Production – 2007

For further media information, please contact:-

• Brid McGrath, Press Advisor: Office +353 1 678 2440 / Mobile: 087 770 8631
• Ken Cleary, Press Officer: Office +353 1 678 2441 / Mobile: 087 905 9618
• Email: press.office@dcmnr.gov.ie