Energy Minister Eamon Ryan announced today that, following a detailed evaluation by his Department of the applications received under the Porcupine Licensing Round, four Frontier Exploration Licences have been awarded.

Licences over areas totalling 4,963 square kilometres are being offered to the following groups:

● ExxonMobil, Providence Resources and Sosina Exploration – two licences.
● Island Oil and Gas and Supernova Ireland Resources BV
● Providence Resources, Sosina Exploration and Challenger Minerals

In awarding the licences, Minister Ryan said that he was encouraged by the keen level of interest of the companies involved, all of whom are currently engaged in existing exploration licences. “I hope the licences awarded under the Round will lead to the discovery and development of new hydrocarbon resources which will reduce Ireland’s long-term dependence on energy imports. Currently 90% of our energy comes from imported fossil fuels. We need to reduce this level of exposure.

The award of these licences is indicative of the recent upswing in the level of investment in exploration of the Irish offshore, which is evidenced in the number of exploration authorisations and a corresponding increase in the level of drilling activity.”

Minister Ryan confirmed that profits from these licences are subject to the revised licensing terms he announced last year. Among these terms was a new profit resource rent tax, which provides for a tax take of up to 40% for more profitable discoveries (an increase of 15% from previous rates).

“I am pleased to say that Irish people will benefit from the development of our own indigenous resources”, said Minister Ryan.

ENDS

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Map showing location of 2007 Porcupine Basin Licensing Round awards

Minister Ryan welcomes interest shown in new oil and gas exploration opportunities in the Porcupine Basin

Dublin Monday 31/12/2007

Applications all under new tax regime
Eamon Ryan, Minister for Communications Energy and Natural Resources, today announced that four applications have been received for Frontier Exploration Licences in the Porcupine Basin Licensing Round.

Applications were received from the following groups:

● ExxonMobil, Providence Resources and Sosina Exploration – two applications

● Island Oil and Gas and Supernova Ireland Resources BV

● Providence Resources, Sosina Exploration and Challenger Minerals

Welcoming the applications Minister Ryan said that he was encouraged by the number of applications and the experience of the companies involved, all of whom are currently engaged in existing exploration licences in the Irish Offshore. Minister Ryan said "I hope that the applications received under the Round will lead to the discovery and development of new hydrocarbon resources and reduce Ireland's long term dependence on energy imports. The applications received represent a further indicator of the upswing in the level of exploration investment offshore Ireland in recent years which has been evidenced by the growth in the number of exploration authorisations along with a corresponding increase in the level of drilling activity."

Minister Ryan confirmed that any licences granted as a result of the Porcupine Round would be subject to the revised licensing terms which he announced earlier in the year which provide for a tax take of up to 40% in the case of more profitable discoveries.

"I am pleased that all applicants, if successful, will fall under the new tax regime. Their interest proves that the balance struck in the new regime is the right one. The potential return to the state was considerably increased, while retaining the attractiveness of Ireland for oil and gas exploration."

His Department will conduct a detailed evaluation of the applications received and decisions on the applications will be made by end January 2008.

Note for Editors

As well as the new higher taxes, all companies granted licences will also have to fulfil the following stricter non-fiscal terms when they explore for oil and gas off Ireland's shores.

Duration of Licences

The duration of deepwater licences will be reduced from 12 years to 9 years and the minimum period for a frontier licence will be reduced to 12 years.
Terms will explicitly state the Minister's power to vary both the duration of individual phases of a licence as well as the overall duration of a licence.

Relinquishment Conditions

The introduction of an automatic relinquishment of 50% of the area covered by a licence at the end of the first phase of all exploration licences and of a further 50% at the end of the second phase of deepwater and frontier licences, regardless of drilling commitments.

Fees

Retain the current level of rental and application fees, subject to annual increases in line with CPI.

Confidentiality period for Well Data

The confidentiality period for well data will be reduced from 5 to 4 years.

Drilling Commitments & Work Programmes

Work programmes will be required to set out clearly the timing of the works proposed.
There will be no change in drilling obligations in the case of standard and frontier exploration licences. In the case of a deepwater licence the first well to be drilled in the first 3 years of the licence (4 years at present) and a second well must be commenced by the end of the 6 ^th year (8 years at present).

Moving to Development Phase

The time allowed for the submission of a plan of development will be reduced from 2 years to 1 year from the date a petroleum lease has been signed.
It will be provided that a lease undertaking may follow on from either an exploration licence or a licensing option and that the information required from the applicant will be the same as that required from a company that is applying for an exploration licence.
There will be clarification that award of a reserved area licence is not automatic; that the Minister may impose conditions; and that the area concerned must be contiguous with the existing lease area.

Categories of Authorisation

All the existing categories of authorisation should be retained (no change).

Minister Ryan opens up new round for oil and gas exploration

“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 This links to a PDF document

Licensing Terms for Offshore Oil & Gas Exploration, Development and Production – 2007 This links to a PDF document

Government announces new round of licensing for oil and gas exploration under new licensing terms

“New regime is in greatest public good” – Minister Ryan

Dublin, 1 August 2007

Minister Eamon Ryan today announced that he would be launching a new licensing round for oil and gas exploration in the ‘Porcupine Basin’ in the early autumn. Details will be published in the EU Official Journal in September.

Companies wishing to explore this area will also be subject to the new licensing terms.

The new licensing terms include a profit resource rent tax. 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%.

The Government has taken this decision in light of a detailed review of licensing terms carried out by the Department of Communications, Energy and Natural Resources and the report by economic consultants Indecon in the area.

Outlining the details of the changes Minister Ryan said, “The basis for this decision was to ensure a greater return to the State from our own natural resources, while maintaining the incentive for companies to explore off our shores. I believe these changes achieve this balance.

I wish to pay tribute to my predecessor Minister Noel Dempsey for beginning this review process, to thank the officials within my Department for directing the research and Indecon for their work. This is clearly a case of collective concerted action on the basis of expert advice, ultimately agreed across Government. It is best practice in policy-making.”

The previous terms were introduced in 1992 with the aim of encouraging petroleum exploration in Ireland. However, this did not eventualise with only 23 exploration wells drilled in Ireland since that time.

Notwithstanding this fact, Minister Ryan said that he is optimistic that greater exploration investment will take place under these new terms. He explained, “The difference now is in prospectivity, price and profitability.

The data available to us now and seismic technology necessary for prospecting have vastly improved in the intervening 15 years. Energy prices continue to rise. Both of these factors are leading to greater profits in the industry. Fewer prospective areas are open for exploration internationally, making Ireland’s unexplored basins more attractive. The Atlantic area is seriously under-explored. Departmental analysis of this area estimated risked reserves in the order of 10 billion barrels** in the Atlantic area alone.”

The Minister also announced that he will be making changes to the non-fiscal licensing terms as well. These include:

reducing the overall length of certain licences
requiring licensees to surrender acreage earlier
increasing all fees in line with the Consumer Price Index and
reducing the confidentiality period relating to data acquired by licensees and furnished to the Department.

All changes will apply to exploration licences awarded after 1 January 2007, effective immediately.

Minister Ryan believes, “These changes in the non-fiscal regime will encourage efficient and timely exploration.

All changes, both fiscal and non-fiscal, alter the way Ireland deals with oil and gas exploration companies. They bring us into line with other comparable countries. Successful exploration will contribute greatly to securing Ireland’s energy supply into the future.

Ireland’s oil and gas is a resource of the people. The Government acts as caretakers/owners of these resources on their behalf. It has a duty to ensure appropriate return and to ensure that they are adequately and properly explored.

Overall, I feel these changes represent a licensing regime that is in the greatest public good”.

ENDS

Note for Editors

* Profit ratio is defined as rate of profits less 25% corporate tax divided by the accumulated level of capital investment.

** Source: DCMNR report 2006, p 84 in Indecon review

Ireland’s new fiscal regime is a model of tax-take based on two separate taxes and is a common model used in many other countries in the petroleum production sector. It is similar to that used by the UK, Denmark, Norway and in German Länder.

Full text of Indecon report available This links to a PDF document

Detail on the non-fiscal changes