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Offshore Exploration

Dáil Éireann Debate, Thursday - 31 January 2013

Thursday, 31 January 2013

Questions (32)

Niall Collins

Question:

32. Deputy Niall Collins asked the Minister for Communications, Energy and Natural Resources his views on adopting the Moroccan model (details supplied) for State involvement in offshore exploration and extraction; and if he will make a statement on the matter. [4739/13]

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Written answers

Countries that have petroleum production use a range of models to obtain a financial return from their natural resources. These models vary both in terms of the instruments used and in terms of the level of take which the State seeks to obtain. Some countries, including Morocco, use a combination of instruments, such as: State participation in licences; production royalties; along with taxation, while other countries, including Ireland, take an approach that is principally based on taxing profits.

Each country’s fiscal system tends to have its own individual characteristics. While Morocco’s terms include a State share in the licence along with royalties ranging from 3.5% to 10%, the terms also provide for an exemption from corporate tax for a ten year period from the commencement of production. In determining the appropriate approach at a national level a range of factors must be considered, with the principal factor being the relative prospectivity of the area. Directly replicating the fiscal regime of another country is unlikely to provide the optimum outcome. Regard must also be had to the approach adopted by countries with whom we are directly competing for a share of international exploration investment.

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