Written Answers - Offshore Exploration.

Tuesday, 14 June 2005

Dáil Eireann Debate
Vol. 603 No. 6

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  338.  Mr. O’Connor  Information on Charlie O'Connor  Zoom on Charlie O'Connor   asked the Minister for Communications, Marine and Natural Resources  Information on Noel Dempsey  Zoom on Noel Dempsey   his views on restoring the State’s 50% stake in all oil and gas finds; the likely cost of such a move; and if he will make a statement on the matter. [19271/05]

Minister for Communications, Marine and Natural Resources (Mr. N. Dempsey): Information on Noel Dempsey  Zoom on Noel Dempsey  The Deputy is referring to the conditions of State participation under the 1975 licensing terms. I [1695]believe that the restoration of the 1975 terms would not make a positive contribution to petroleum exploration and development in offshore Ireland. In the context of a commercial find it would impose a substantial up-front capital contribution, while the State’s share of income from such an investment would be received piecemeal over a protracted timeframe, e.g. up to 20 years.

The 1992 terms and fiscal regime were introduced to address a situation of declining exploration in offshore Ireland, especially on the Atlantic margin. Water depths here are up to ten times greater than the North Sea and make the costs of both exploration and development significantly greater than those in the North Sea. The costs are also affected by the lack of infrastructure, e.g. pipelines, platforms, terminals, which are generated by commercial finds.

The 1992 licensing terms and the fiscal regime for petroleum were introduced to address and achieve the risk-reward balance which reflects Ireland’s circumstances and acknowledges the realities of competition for internationally mobile exploration and production investment. The terms and fiscal regime have been supported and implemented by every Government since their introduction.

It is difficult to offer accurate costs without disclosing confidential information. It is estimated that if the State were to acquire 50% participation in the combined estimated costs of appraisal and development for both the Seven Heads and the Corrib gas fields, the cost to the State would be of the order of several hundred million euro.

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