The fiscal terms for the licensing regime under which offshore exploration companies operate are provided for by the Finance Act 1992. The system is straightforward and is based on a corporation tax rate of 25% applying to profits earned. Historic capital expenditures are 100% deductible at the start of production. No royalty or production bonus or their equivalents are required.
The regime was introduced with a view to establishing a risk/reward balance, which reflects Ireland's circumstances, including the industry perception of relative prospectivity, and acknowledges the realities of competition for internationally mobile exploration/production investment. I recently put in motion a review of the licensing regime under which offshore exploration companies operate in this country.
My Department recently engaged the advice of external experts to independently validate the proposed changes. When I have received and considered the report of the external experts I will bring forward proposals in relation to the licensing regime for exploration and production.
I should point out to the Deputy that Nigeria is one of the biggest oil producers in the world, and a substantial gas producer, and is a proven petroleum province. Ireland, on the other hand, does not currently produce any oil and only produces approximately 15% of its gas requirements.