My point is they did not know that at the time, any more than we do at present. By the way, the Minister of State at the Department of Communications, Marine and Natural Resources, Deputy Browne, believes that Ireland has significant resources in our 1 million sq. km of sea.
As for the publication of the Advantica report yesterday, while this is welcome, significant problems remain regarding the Corrib gas pipeline itself. Yesterday I asked that either the Minister of State or the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, should come before the House in the next few weeks. Members should be given an opportunity to discuss the Advantica report, the technical advisory group's report, as well as the other documentation published yesterday by the Minister. Moreover, Members might have a full discussion of the present level of mediation in respect of the Corrib dispute to try to establish a picture of its current status. As far as I can ascertain, there is no green light and the media have misinterpreted what took place yesterday. Significant and intense negotiations must take place in respect of the finalisation of the Corrib dispute.
The Corrib gas reserve is a vital national resource which provides a very important window of opportunity for this country to diversify from oil and to move towards alternative technologies. Hence, it is a critical national priority to get the Corrib resource ashore. However, this must be done in a manner which is agreeable to the local community. If that is not the case, while the Minister may issue as many green lights as he pleases, nothing will happen. Hence, I urge the Minister to inform the Government that all Members, including my colleague from County Mayo, Deputy Cowley, would welcome the opportunity to discuss this issue in depth in the House in the coming weeks.
As for the motion, under the Constitution, all natural resources within our jurisdiction and all associated franchises and royalties, belong entirely to the people and to the State. That is the factual and legal situation. One of the most annoying features of the current debate is that all our current discussions in respect of the Corrib field and the potential resources of this country are still governed by an Act that was passed in 1960, namely, the Petroleum and other Minerals Development Act. In the 1960s, when the first licensing was granted to the Marathon oil company — it received an exploration licence for the paltry sum of £500 — the Act still made it clear that all the reserves of natural resources remained vested in the Minister and the State.
The Leas-Cheann Comhairle is aware that the first comprehensive regime of licensing and royalties was established in 1975 by our great Labour predecessor, the former Minister for Industry and Commerce, Mr. Justin Keating. The Leas-Cheann Comhairle served with him in that Government. It is interesting to reflect on Mr. Keating's terms. They included an automatic 50% State shareholding in any oil or gas discovery, a royalties regime of 6% or 7% and an oil and gas tax of 50%. This system was placed in statutory and legal form in the mid-1970s and served, until 1992, as the basis of our licensing regime.
The shadow of the former Minister for Industry and Commerce, Mr. Ray Burke, still hangs over the Dáil because these terms were first significantly amended by him. However, it must be stated in the context of the motion before the House that his royalty regime was still based on a 35% take for the State. The former Minister, Mr. Burke, spoke of the necessity for amending the changes made by Mr. Keating's regime. He stated, using the argument still made by the Minister for Communications, Marine and Natural Resources still uses:
[W]hen we are a recognised oil province, we will be able to afford the luxury of more stringent terms, but for now it is clear that concessions of a radical nature are necessary to offset, to the greatest possible extent, the effects of low oil prices on exploration in Ireland and the recent disappointing results.
The real changes and evolution of our current licensing regime came about during the 1992 Fianna Fáil-Progressive Democrats Government, in which the present Taoiseach, Deputy Bertie Ahern, served as Minister for Finance. The 1975 terms were significantly amended to produce the current regime, which effectively offers carte blanche. The present regime gives significant power to the Minister to license companies, as he has done in the north-western seas over recent months, and includes the key features which this motion deplores. These include the absence of royalties or production-based levies, the fact that any oil exploration activities are only subject to the 25% corporation tax, and that there are 100% write-offs for oil companies’ expenses. There is loss relief and 100% deductions for abandonment costs to encourage exploration. These terms have regulated our oil exploration ventures.
I commend the Independent group for tabling the motion. It is timely, particularly in light of the situation in the Corrib, which has been a wake-up call for people in regard to our natural resources. Those who support the current system argue that the potential level of natural resources in Irish waters is not sufficiently substantial to warrant a system on a par with Norway or to significantly change the current terms. Since the beginning of last year's dispute over the Corrib gas pipeline, the Minister, Deputy Noel Dempsey, has consistently disparaged the notion that Irish waters are an attractive place for oil or natural gas exploration ventures. He claimed recently that very few companies are interested in exploration off Irish shores, and because of this, the antiquated and inadequate framework for regulating the exploitation of Irish natural resources must remain unchanged. As I said to Deputy O'Malley a few minutes ago, if one examines the amendment to the motion, he appears to be changing his tune because we are going to have new fiscal terms. The Minister signalled in The Sunday Tribune last November that he was prepared to examine the regime for regulating the exploitation of Irish natural resources. The current regime is often cited as a reason for the lack of applicants for the 2005 offshore licensing round when only two companies applied.
There are many other factors to be considered, the first of which is the massive market price of oil and gas, which may be heading for a $100 a barrel for oil. It recently reached almost $75 a barrel. At these prices, areas which were previously considered to be inhospitable or difficult to explore are becoming areas that all oil companies are beginning to consider. There is also the development in technology. There have been huge developments, particularly in offshore technology, for example, along the South African coast and Angola and up towards the middle of Africa. There are new ways of exploiting resources, which we are experiencing in the Corrib field which is effectively 60 miles off the coast. There is also significant interest in Irish exploration in recent months, which is a good effect of the Corrib crisis. A few weeks ago, when I showed the map of the north western licensing round to the Minister, he did not deny that there is a lot of very valuable territory which still has to be allocated. An Irish company, Grianan Energy Limited, must be commended because it is beginning to finally recognise a central tenet of the people of Rossport's claim that any development should enhance the locality and this nation by offering it 10% of profits. Most of us in this House believe there should be a much more far-reaching system of ensuring that local areas, like Mayo, get real and long-lasting benefits from exploration. In October it was reported that Island Oil and Gas and Petrolia are to drill three wells off the Irish coast. This began a few weeks ago. We also heard that Providence Resources and a private Scottish-based company, Sosina Exploration, are getting an exclusive licence to explore and exploit the so-called Dunquin area off the south-west coast. There have been extraordinary claims that Ireland's oil and gas needs for perhaps a century or more could be met by just that one field. Providence Resources estimates it could contain more than 25 trillion cubic feet of gas and 4 million barrels of oil. We use approximately 200,000 barrels a year.
All of these projects indicate there is real and deepening interest in exploration off our coast. The distinguished journalist, Mr. Colm Rapple, wrote some interesting articles in recent months when he argued strongly that perhaps the Minister, Deputy Noel Dempsey, and the Minister of State, Deputy Browne, should talk directly to oil companies face-to-face in regard to exploration ventures. Some Deputies assume a country would have to invest money up-front to obtain benefits from exploration. However, if we examine other European countries which have a history of exploration, as well as Canada, including Newfoundland and so on, this is not the case. Generally speaking, the state gets involved in joint ventures on the basis of no foal, no fee, and states and communities are not liable for vast exploration costs.
Deputies referred to what other countries do in this regard. The experience of Norway is relevant. Deputy Cowley, members of the Labour Party and I found it extremely helpful when we liaised with Statoil when the five Rossport men were in prison. Some 70% of Statoil is owned by the Norwegian state. The Norwegians' basic modus operandi was that they learnt what exploration was about, and when they knew what it was about, they issued licences, drew up fiscal terms and began to explore. Like our National Pensions Reserve Fund, Norway set up a massive trust fund for the Norwegian nation for generations of people who will obtain great benefit from the massive resources off the Norwegian coast. Norway’s corporation tax stands at 28%. It also has a special tax of 50% on income derived from exploration activities. There are some write-offs, but there is still a significant take for the Norwegian state, even in the current situation where Statoil is 30% owned by the private sector.
The Norwegians have a CO2 tax to protect the country's environment. It also has an area fee. It is an interesting device, which is based on the amount of acreage provided, which the Minister is currently doing. It is intended to encourage return of acreage that companies do not wish to exploit. We could examine what our Norwegian colleagues are doing to make a profit from exploration ventures.
Denmark, which has been self-sufficient since 1997, has a significantly different regime. I commend my Independent colleagues on the motion. The Minister, Deputy Noel Dempsey, lashed out at them last night, which was unfair. One of the proposals in the motion relates to a State company. In fact, it is an exploration agency, which is a commendable idea. Denmark has such an exploration agency, DONG, an exploration and production company. It is a limited oil exploration company whose shares are owned by the Danish state. DONG has been a partner in all consortia awarded licences for exploration in Danish waters since 1984. It is also active in Greenland, the Faroe Islands and Norway. The Danish state also takes a very pro-active interest in the resources off its coast. It has a 28% tax, which is a little higher than ours, as well as a hydrocarbon tax and an oil pipeline tariff.
We could examine smaller communities, in particular the Faroes. The Faroe Islands became involved in the exploration area fairly recently. It awarded seven licences to 12 oil companies in 2000. The regime has three different components, including a royalties regime, a hydrocarbon tax and a special tax. Royalties are levied at a rate of 2% and the hydrocarbon tax is levied at 27%. For example, if a field has a rate of return higher than 20%, the special tax will be set at 10%. If it has an internal rate of return greater than 25% or 30%, the special tax will be levied at 15%.
In the 1970s, when the Labour-Fine Gael Government was in power, Deputy Fiona O'Malley's father savagely attacked our great Minister, Justin Keating, on the exploration regime. He was talking nonsense then and she is still talking nonsense 30 years on. Other countries make better use of their natural resources, as we should be doing.
In terms of local benefits and benefits for the State, we should consider exploration areas such as Newfoundland and Labrador in Canada where there has been an extensive agreement with companies to deliver real benefit to local communities. The agreement includes pre-production expenditure, person-years of construction employment and person-years of operation employment. These are detailed terms set out by the provincial government of Newfoundland in regard to the exploration of its waters. Yet the Minister, Deputy Noel Dempsey, spoke a lot of rubbish in the House last night for which he was commended by some in the media. Every day, some €14,000 or €15,000 is being totted up as a result of those famous voting machines which will never be used.
The platform used in Newfoundland attempted to maximise local employment. The Faroese and Canadian examples show us there are different ways of exploration, and there is logic in the general spirit of the motion put before us by the Technical Group.
On a number of occasions during the Corrib gas crisis, I appeared on Midwest Radio. One of the interesting examples of communities we considered, which got real value from their exploration was the Shetland Islands. The local authority there was given scope to negotiate for a share in revenues generated by North Sea oil production and invested locally in the fishing industry, economic diversification and approved social amenities for senior citizens. This is a small, isolated community which has done very well from direct negotiation on behalf of the British Government and the Scottish Executive which gave the community permission to deal directly with the oil majors and get the best possible deal for the Shetlands. How different it is for Mayo. We have not seen the same kind of autonomy given to the people of Mayo and the surrounding counties in the west to maximise the significant benefits for the national and local economy of petroleum production activities.
Various states have different regimes to suit their specific circumstances but in common, they have a proactive, serious, hands-on approach to exploration, unlike Ireland, leaving it to whoever, an offhand approach which has served us so badly and has resulted in five men going to jail over a simple exploration project.
For the past few months, the Petroleum and other Minerals Development Bill has been on the clár, and when I get a chance to introduce it, I hope our colleagues in Opposition can support it. Its main focus is to ensure greater accountability to Dáil Éireann in the regulation of the exploitation and production of Irish natural resources. It also provides for stronger measures to ensure health, safety and environmental concerns are addressed and emphasises the critical importance of establishing and outlining the proposed national and local benefits of any licensing regime.
The great value of the debate we had last night and are having today is that for the first time for ages — we last discussed the Corrib gas find for perhaps half an hour — we have had an opportunity over three hours to discuss in depth the issues surrounding licensing, exploration and getting the best possible value for the people. I urge the Minister for Communications, Marine and Natural Resources to adopt the Labour Party Bill. The Bill would ensure that every time the Minister came forward with a round of licensing proposals he would have to bring them to the House and we would have to debate the matter and decide what to do about it. In the past, during the era of Ray Burke and the then Minister for Finance, Deputy Bertie Ahern, now the Taoiseach, very significant powers were granted to wholly draw up the regulatory and fiscal framework for exploration and production. The Labour Party Bill would require the Minister to present a draft scheme on the licensing terms which would have to be approved by both Houses of the Oireachtas, and return to the Dáil at least every six years afterwards regarding any licence given. There would be a statutory basis for reviewing and debating the terms of regulation, ensuring that any licensing regime is suitable for the context within which it operates.
The Labour Party Bill would also establish that the Minister would have to bring before the House a report on any draft scheme setting out his or her views on the proposed regulations and outlining the general advantages likely to accrue to the State from such a licensing scheme. As far as we can see, very little economic benefit currently accrues to the State as a result of the present terms for exploiting reserves of natural gas. Profits generated in the industry are enormous by comparison with other states.
A key element of the Labour Party Bill would be that any proposed development would have to adequately incorporate local considerations, in particular health and safety issues. I commend the Technical Group for bringing the motion before us and support its general spirit. This has been a very useful debate.
