"This is one of the most important stories of it's kind in Europe."
THE tax charged on profits made by companies in Irish territory should be increased dramatically and the Government should take control of production levels, an Oireachtas committee said yesterday.
The report from the Joint Committee on Communications, Natural Resources and Agriculture calls for the State to make several changes to the way it awards exploration licences aimed at giving the Government more control over the sector.
Companies currently pay corporation tax of 25pc on profits and then an additional Petroleum Resource Rent Tax (PRRT) of up to 15pc depending on the size of profits earned here.
Under the committee's proposals, PRRT would be increased to as much as 55pc if the oil or gas find is big enough, creating a de facto tax rate of between 40pc and 80pc.
Any changes, however, would not be retrospective.
The committee made a number of other recommendations including:
? A review of the Petroleum and Other Minerals Act, 1960 to clarify the law on oil and gas licences.
? Fiscal and licencing terms should be kept under constant review in order to allow any changes when required.
? Companies exploring the same areas around Ireland should be mandated to unify operations to ensure better data on the area.
? The State should control production volumes as part of its resource management to ensure that as much as possible is produced from a field.
? Gas flaring should be banned.
"Ireland's offshore oil and gas exploration industry has operated with limited success over the last 40 years. In recent years the exploration developments off the west coast of Ireland have brought the workings of the industry to the forefront of the public mind.
"Recent news reports seem to indicate further possibilities for a viable oil discovery off the south coast.
"It is therefore an opportune time for our committee to publish this report on an issue critical to Ireland's future prosperity and sustainability," he said.
"The committee's key concern is to strike the appropriate balance between maximising state revenue with incentivising offshore oil and gas exploration," he added following the publication of the Report on Oil and Gas Exploration yesterday.
The Irish Offshore Operators' Association, a trade group for the industry, was broadly positive on the report but admitted "concern" over the proposed tax increases.
- Peter Flanagan