Dáil Éireann Debate, Tuesday - 11 June 2013
65. Deputy Andrew Doyle asked the Minister for Communications, Energy and Natural Resources his views on the May 2012 report entitled Offshore Oil and Gas Exploration produced by the Joint Oireachtas Committee on Communications, Natural Resources and Agriculture; his views on the eleven recommendations contained in this report; and if he will make a statement on the matter. [26629/13]
View answerThe Joint Oireachtas Committee’s report represents a valuable contribution to the debate on how Ireland should manage its indigenous oil and gas resources, to ensure the best result for the people of Ireland.
I am aware that the former Joint Committee members invested considerable time in the gathering of evidence, consideration of such evidence, and preparation of the final report. In that regard I would like to pay tribute to the members of the Committee for their efforts. I have requested the Chief Whip to arrange for Dáil time to be allocated to statements on this important report during this session.
The 11 recommendations included in the report reflect the broad nature of the report and address a number of themes.
The report recognises the importance of Ireland’s legislative and strategic policy approach being fit for purpose. It brings a focus to specific aspects of the non-fiscal regulatory regime. It considers interactions involving the public in general, as well as those relating to the communities of areas where development activity is planned. The theme, however, that has generated the greatest level of comment relates to the tax terms that should apply in the case of future commercial discoveries.
In relation to the recommendation that the 1960 Petroleum and Other Minerals Development Act should be reviewed, I would point out that in the period since it was enacted a broad body of legislation at national and European Union level that is of direct relevance to petroleum exploration and production activities has also come into being. This includes planning, safety and environmental legislation. Against that background, my Department is currently engaged in a review of the 1960 Act.
With regard to the recommended need for a clear strategy governing Ireland’s approach to petroleum exploration, our overall strategy in this area is to seek to maximise the benefits to the people of Ireland from our indigenous natural resources.
In respect of the recommendations relating to the maximisation of production from a commercial field, the principle of unitisation and the issue of flaring of gas, I believe that these issues are already addressed to a considerable degree by the existing licensing terms, together with the Department’s own industry-specific rules and procedures.
As regards public consultation, the existing statutory obligations requiring public consultation in the case of petroleum-related projects are very detailed and extensive. It is possible that the circumstances which gave rise to a focus on public consultation predate the enactment of the Strategic Infrastructure Act which provides for a more holistic, transparent and strengthened approach to the assessment of applications for development consent for major transport and energy projects.
The “community gain” concept discussed in the report is indeed interesting. As a concept it is clearly not industry-specific. It is also complex, as communities are not homogenous and as a result what some may consider a gain, others may consider a loss. An Bord Pleanála, in granting planning consents under the Planning and Development (Strategic Infrastructure) Act, has included specific “community gain” conditions in some cases.
The Government is fully supportive of a community gain approach in the delivery of energy projects. This is explicitly referenced in the Government Policy Statement on the Strategic Importance of Transmission and Other Energy Infrastructure published in July of 2012. The Policy Statement stresses the need for energy project developers to examine appropriate means of building community gain considerations into their project budgeting and planning.
The question of introducing a specific community gain provision on a statutory basis is a far broader question and would of course have implications well beyond the subject matter of the current report.
As regards the recommendation for an almost doubling of the existing tax rate applying to petroleum production, I would strongly argue that this particular recommendation is not underpinned by the facts and analysis contained in the Committee’s own report.
I also struggle to understand how Ireland could be expected to have Norwegian style tax rates without also having Norwegian levels of commercial discoveries. The fact remains that there have been only four commercial natural gas discoveries since exploration began offshore Ireland in the early 1970s, and no commercial discoveries of oil to date.
In my view, Ireland’s focus should be on how to encourage an increase in the level of exploration investment and exploration drilling in particular. This is what is needed if we are to establish the true petroleum potential of the Irish offshore.
The joint committee signalled clearly in its recommendations that it considered a review of the fiscal terms would be appropriate. It was also very clear that any adjustment to the fiscal terms should not be retrospective. I am completely in agreement with this latter point. I am conscious that long-term investment decisions on exploration expenditure would benefit from the maximum degree of certainty on the stability of the fiscal regime.
With that in mind, and having regard to the fact that the last review of the fiscal terms was in 2007, I intend to listen to the views of deputies through the course of the Dáil debate that commenced last month and then, following conclusion of the debate, will seek some further independent expert advice on the “fitness-for-purpose” of Ireland’s fiscal terms. Such expert advice would focus on what level of fiscal gain is achievable for the State and its citizens; and the mechanisms best suited to produce such a gain. Certainty as to fiscal terms is a pre-requisite to attracting oil and gas exploration investment to Ireland. In that regard, and particularly in the context of planning for the next licensing round, it would be my intention to bring my consideration of this matter to a conclusion before the end of this year. That would ensure that the next licensing round could be launched against a backdrop of regulatory certainty and encourage much needed new investment in exploration in our offshore.
