A petroleum authorisation, issued under the Petroleum and Other Minerals Development Act, 1960, is required to undertake oil and gas exploration and extraction activities in Ireland. Appendix 1 to the Licensing Terms for Offshore Oil & Gas Exploration, Development & Production sets out the application fees, annual rental fees, assignment fees and contributions to research funds required in respect of the different forms of petroleum authorisation. The Licensing Terms are published on my Department’s website at www.pad.ie.
As regards extraction, there have been four commercial natural gas discoveries since exploration began offshore Ireland in the early 1970s, namely the Kinsale, Ballycotton and Seven Heads (Kinsale area) producing gas fields off the coast of Cork and the Corrib gas field off the coast of Mayo.
The direct financial return to the State from the Kinsale and Ballycotton gas fields operated by PSE Kinsale Energy is through annual lease rental fees, royalties payable at a rate of 12.5% of the fair market value of the gas at the well head and corporation tax at 25%. A 1959 Agreement provides for a remittance of corporation tax where overall State take (annual lease rental fees, royalties and corporation tax) exceeds 40% of net income from these two fields.
The direct financial return to the State from the Seven Heads gas field operated by PSE Seven Heads is through annual lease rental fees and corporation tax at 25%.
The direct financial return to the State from the Corrib gas field which is expected to come into production in 2015 will be through annual lease rental fees and a 25% corporation tax on profits.
The direct financial return to the State arising from any future commercial discoveries made under a petroleum authorisation issued up to December 2006 will be through annual lease rental fees and a 25% corporation tax on profits.
The direct financial return to the State arising from any future commercial discoveries made under a petroleum authorisation issued from January 2007 to May 2014 will be through annual lease rental fees, a 25% corporation tax on profits, and a Profit Resource Retention Tax of up to 15% on profits depending on the profitability of the individual field, with a maximum marginal tax rate of 40%.
Under the revised fiscal terms proposed in the Finance Bill 2015, the direct financial return to the State arising from any future commercial discoveries made under a petroleum authorisation first issued from June 2014 onwards will be through annual lease rental fees, a 25% corporation tax on profits, and a Petroleum Production Tax of up to 40% depending on the profitability of the individual field; with a maximum marginal tax rate of 55%.
