Vol. 577 No. 4
54 Mr. Gogarty asked the Minister for Communications, Marine and Natural Resources his plans to review the ministerial amendments to regulations carried out on 30 September 1997 which led to the abolition of most State royalties from oil and gas exploration discoveries. [31387/03]
Royalties on petroleum production were abolished by ministerial decision in 1987 as part of a number of adjustments. There are no plans to review the existing licensing terms. While the terms, including the taxation terms and the lack of royalties, may appear generous, no company has benefited from them since there has been no new production since Kinsale in 1978 until last Saturday when production started from the Seven Heads gas accumulation. The rationale for the terms have been accepted by every Government since their introduction.
The Government considers that these terms are necessary to maintain a viable level of licensing and exploration. Ireland has a difficult environment in which to explore and develop finds, including deep water eight to ten times the average depth in the North Sea and distance from shore and lack of infrastructure. All of these factors make offshore Ireland expensive for petroleum exploration and development and put Ireland at a significant competitive disadvantage compared to the shallower and, to date, more productive waters of the North Sea. This disadvantage means that Ireland would be extremely unlikely to attract the interest of the industry, and subsequent funding of exploration, without the present terms. Despite the terms, the number of exploration licences and the level of exploration activity have declined significantly in recent years.
