Offshore Exploration

Dáil Éireann Debate, Tuesday - 23 October 2012

Tuesday, 23 October 2012

Questions (285)

Pearse Doherty

Question:

285. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform further to a Parliamentary Question No. 493 of 18 September 2012 and Parliamentary Question No. 79 on 26 September 2012, the reason the royalty payments received from a company (details supplied) by the Exchequer in respect of the so-called fair market value of the wellhead of oil, gas or other petroleum substances produced are less than the payments made by the Exchequer to the company, that is, that the State received €2.093m of royalty payments but paid out €2.603m to the company as recorded in the July 2012 Exchequer statement; if he will provide a detailed calculation of the €2.603m paid to the company as recorded in the July 2012 Exchequer statement. [45970/12]

Written answers

Minister for Public Expenditure and Reform

The remittance and royalties do not relate to the same financial year. Under Article X of a 1959 Oil Exploration Agreement the company is entitled to a remittance of the amount by which the total of tax, rent and royalty paid in any accounting period exceeds 40% of the "net income" as defined in that Article. The remittance amount of €2.603m, paid to the company in 2012 is based on the net income and tax, rent and royalty payments paid by the company in 2010. PSE Kinsale pays royalties at a rate of 12.5% of the fair market value at the wellhead of oil, gas or other petroleum substances produced. The royalty amount of €2.093m was received in 2012 but relates to activity between October 2011 and March 2012.