In May 2012 the former Joint Oireachtas Committee on Communications, Natural Resources and Agriculture published its Report on Offshore Oil and Gas Exploration. The Report contains a number of recommendations in respect of the fiscal and regulatory framework applying to oil and gas exploration in Ireland. At my request the Report was debated in Seanad Éireann on 27 June 2012 and in Dáil Éireann on 14 May 2013, with the debate concluding on 9 July 2013.
Some of the report’s recommendations are both sensible and desirable, others are already provided for in the existing licensing and regulatory regime while there are a number of recommendations that could usefully be explored further, including several which have wider public policy implications. There are also a number of recommendations in respect of which I have strong reservations and remain to be convinced that their adoption represents the best way to proceed.
With regard to the recommendation in respect of the Petroleum and Other Minerals Development Act 1960, this Act provides the legislative underpinning to the regulatory framework applying to oil and gas exploration in Ireland. Since it was enacted, a broad body of legislation at national and European Union level that is directly relevant to petroleum exploration and production activities, including planning, safety and environmental legislation, has been passed. Against that background, my Department is currently engaged in a review of the 1960 Act. I concur with the recommendation that there should be no changes to the fiscal and licensing terms applying to existing agreements, given the need for the licensing regime to communicate both stability and certainty to industry. This is especially true where Ireland is competing with other countries to attract investment and where the nature of the business requires the taking of a long-term view.
With regard to the recommendation in respect of obtaining geological data from all licensees, this provision is already included in the work programme of licences issued by my Department. The recommendations relating to the maximisation of production from a commercial field, the principle of unitisation and the issue of flaring of gas are already addressed to a considerable degree by the existing licensing terms, together with my Department’s own industry-specific rules and procedures.
On the matter of public consultation, all major infrastructure consent processes in this State involve a public consultation phase, which generally includes an oral hearing. These requirements are not industry-specific and they flow from both national and European legislation. This means that any future oil or gas development project would be subject to a number of consent processes, each of which would have a detailed public consultation phase.
The “community gain” concept discussed in the report is clearly not industry-specific. The Strategic Infrastructure Act now enables Bord Pleanála to attach specific community gain conditions to a planning consent. The Government fully supports a community gain approach in the delivery of energy projects. This is explicitly referenced in the Government’s Policy Statement on the Strategic Importance of Transmission and Other Energy Infrastructure which was published in July 2012 and which now guides the planning authorities in their decision-making. That Policy Statement stresses the need for developers to examine appropriate means of building community gain considerations into project budgeting and planning.
My Department’s policy regarding oil and gas exploration is outlined in the Department of Communications, Energy and Natural Resources Statement of Strategy 2011-2014. My Department has also contributed to the Harnessing Our Ocean Wealth: An Integrated Marine Plan for Ireland policy document.
Regarding the recommendation that my Department should have on-going contact with other countries, my officials have regular interaction with their equivalents in other administrations at EU and International fora.
In respect of the recommendation that a forum comprising key stakeholders be established to improve communications between stakeholders and maximise the potential for the Irish people of Ireland’s hydrocarbon resources, I would point out that my Department engages on a regular basis with elected representatives, other state bodies, industry interests, community interests, non-governmental organisations and the general public on this issue.
Insofar as the changes in the tax regime proposed by the Report are concerned, these are not minor or modest in nature. The Report proposes a fundamental re-positioning that would raise Ireland’s tax to a similar level as that of the UK and, in the case of very profitable fields, would impose a higher tax here than would apply in Norway. During the course of the Dáil debate I stated my intention to seek further independent expert advice on the “fitness-for-purpose” of Ireland’s fiscal terms, such expert advice to focus on what level of fiscal gain is achievable for the State and its citizens and, equally important, on the mechanisms best suited to produce such a gain.
On 5 March 2014 I announced that my Department had selected international oil and gas experts Wood Mackenzie to advise on the “fitness-for-purpose” of Ireland’s current oil and gas fiscal terms. Wood Mackenzie, who have considerable experience in providing fiscal advice to a broad range of clients, including governments, have now commenced their work and I look forward to receiving their expert advice. It is intended to bring consideration of this matter to a conclusion in the coming months. This will ensure that the next licensing round can be launched against a backdrop of regulatory certainty and encourage new investment in exploration.