Terms Defined for Ireland's Porcupine Basin
With the deadline of December 18, 2007, fast approaching, Ireland announces terms for new Porcupine Basin oil and gas licensing opportunity.
Offering 229 full and three partial blocks, the area up for grabs is west of Ireland in the Porcupine Basin – comprising 63,500 square kilometers (approximately 15.7 million acres).
Officially announced in the European Journal in July, the deadline for applications for Frontier Exploration Licenses in the area is December 18, 2007 – just 70 days away.
Citing the country’s dependence on outside sources for imported oil and gas (currently at 85 percent) as a main reason for opening up the region for exploration, Ireland’s Minister Eamon Ryan noted that before licenses are awarded a Strategic Environmental Assessment will be conducted on the region. The report, generated by ERT and Aqua Fact, will be available soon.
Applications for licensing can be made for up to three blocks in the north of the Porcupine Basin and up to six blocks in the south of the basin.
The biggest change in the exploration terms is Ireland’s new tax regime, announced in August and applicable to Porcupine Basin discoveries.
“Ireland’s oil and gas is a resource of the people,” said Ryan. “I want to ensure that our waters are fully explored and also that we get a proper return to the State.”
The new tax rate will be in addition to the 25 percent corporate tax rate currently in effect, enacting a graded scale according to profitability.
Under the new tax system, the most profitable fields will be taxed an additional 15 percent when the profit ratio is in excess of 4.5 – while the least profitable fields, those earning a less than 1.5 profit ratio, will not experience additional taxation.
Fields resulting in a profit ratio between 3.0 and 4.5 will be taxed an additional 10 percent, and fields earning a 1.5 to 3.0 profit ratio will be taxed an additional 5 percent.
“Therefore profitable fields will pay up to 40 percent in taxation to the Exchequer,” Ryan said. “That’s a top rate increase of 15 percent for the oil and gas companies involved.”
In correspondence with the Porcupine Basin licensing round, upstream consultancy company Hannon Westwood has announced the results of its GMatrix Ireland study.
Working with Ireland’s Department for Communications, Energy and Natural Resources’ Petroleum Affairs Division, GMatrix is a prospect database of the country’s Atlantic Basins.
The results of the study reveal that there are more than 160 undrilled prospects in the region up for grabs!
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