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Call not to Raise Oil/Gas Tax Take

Posted: July 29, 2013

Monday, July 29, 2013 by Geoff Percival- Irish Examiner

 “The main representative body for Ireland’s exploration industry has called for the Government to hold back on plans to increase the potential tax take from companies drilling for oil and gas in Irish waters.

As it currently stands, the Government stands to receive between 25% and 40% of profits from any commercial field in Irish waters — of which there are currently none (although Barryroe, in the Celtic Sea, is on course to be the first).

However, Natural Resources Minister Pat Rabbitte recently said that he intends to seek independent expert advice, by the end of this year, on what level of fiscal gain should be achieved by Ireland and how the State should go about achieving it.

A recent Joint Oireachtas Committee called for the profit take to be as high as 80%, which would mirror the Norwegian model.

However, while it takes 78% of the profit from any commercial field in its waters, Norway — as well as having a more mature and developed offshore exploration industry than Ireland — also repays the same percentage of drilling costs to companies if said field is found to be dry; something Ireland — in current economic times — could not do.

At the end of a week that has seen international oil giant ExxonMobil put an indefinite pause on its interest in Ireland by finding no sign of any commercial hydrocarbons at initial drill at the highly-anticipated Dunquin field off the south-west coast of the country, the Irish Offshore Operators’ Association has called for a rethink by Government.

“We think the Government should be cautious in its approach,” said Fergus Cahill, chairman of the Irish Offshore Operators’ Association.

“It would be a great mistake to change the fiscal terms at this stage, especially in light of Dunquin, and at a time when we are just beginning to see more activity in Irish waters and more companies come in,” he added.”

http://www.irishexaminer.com/business/call-not-to-raise-oilgas-tax-take-238196.html

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Providence oil find could generate €4.5bn for State, says new report

Posted: May 28, 2013

Providence: Barryroe Well

Nick Webb – 26 May 2013

 

Providence Resources’ oil find at Barryroe, off the coast of Cork, could generate taxes of €4.5bn over the life of the well, according to a new report from PriceWaterhouseCoopers.

This is the equivalent to the entire annual corporate tax take in Ireland for 2011, according to PwC.

The State, it says, would earn money from the corporate tax and from the windfall taxes generated by the huge find off the south coast.

The PwC report suggests that 10 finds equivalent to Barryroe would have the potential to generate 13,500 jobs during the development phase and 11,500 jobs during the production phase of these fields. An entire new specialist oil services industry would need to be developed near the south coast to cater for the oil fields.

The Barryroe find is a game-changer for the Irish oil industry, as it is the first commercial oil field discovered off Ireland.

Recent months have seen massive activity off Ireland’s coast with the arrival of Kosmos, Cairn Energy and other new parties seeking to explore for oil. Fastnet Oil & Gas last week announced surveys had revealed that its Kinsale acreage could potentially contain up to two billion barrels of oil.

The next two months will prove critical for the future of Tony O’Reilly’s Providence Resources. Results of drilling at its Dunquin well may come through in July, while the €400m-listed firm may also ink a deal to farm out a major chunk of its valuable Barryroe oil field off Cork.

Industry sources believe that Providence may be taken over by an oil major such as Petronas or Exxon if the Dunquin results are positive.

However, at the same time as all this exploration is under way, the Government is examining whether to hike taxes levied on oil finds.

Irish Independent

http://www.independent.ie/business/irish/providence-oil-find-could-generate-45bn-for-state-says-new-report-29297083.html

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Deep Kinsale could contain 2.3bn Barrels of Oil

Posted: May 22, 2013

Fastnet Oil says independent assessment established  presence of  significant potential.

 

An independent assessment of explorer Fastnet Oil and Gas’s Deep Kinsale target off the south coast indicates that it could contain 2.3 billion barrels of oil.

Fastnet said today that an independent assessment of the licence area by SLR Consulting established the presence of a significant potential “unrisked” resource in place of over 2 billion barrels.

The group said that SLR carried out the assessment in accordance with generally accepted international procedures.

In February, Fastnet agreed a deal with Petronas subsidiary Kinsale Energy to farm into the so-called “deep Kinsale prospect”. It lies deep below the existing Kinsale gas field, which has by now given up all but 3 per cent of its reserves.

As part of its deal with Kinsale Energy, Fastnet carried out engineering and geological studies and a wide-ranging, three-dimensional seismic survey.

Fatnet said the independent assessment confirms that oil-bearing sands encountered in the Middle and Lower Wealden wells drilled by Marathon in the early 1970’s occur in the same geological structure that hosts the shallow producing gas sands in the Kinsale gas field.

The Deep Kinsale structure covers an area of up to 162 square km.

“Deep Kinsale is a large anticlinal structure, which has the potential to contain a significant oil accumulation directly beneath the producing Kinsale gas field and the two platforms, in the Celtic Sea,” Fastnet founder shareholder John Craven said.

Earlier this month, the oil and gas company, which is focused on near term exploration acreage in Africa and the Celtic Sea, was awarded a new licensing option in the North Celtic Sea. The option covers blocks in the Mizzen Basin, known as East Mizzen, and the western end of the North Celtic Sea Basin, offshore Ireland.

From The Irish Times-Pamela Newenham

 

http://www.irishtimes.com/business/sectors/energy-and-resources/deep-kinsale-could-contain-2-3bn-barrels-of-oil-1.1402539

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Contract to Assess Oil Potential

Posted: May 13, 2013

From The Irish Examiner – By Geoff Percival

The Government is set to announce details of a major research contract to assess Ireland’s true oil and gas potential in the coming weeks, with industry rumours suggesting Italian giant Eni could be signed up as project partner.

The project will focus on a seismic survey off the west coast, to judge the oil and gas reserve potential of the under-explored Atlantic Margin area.

While the provision of “relevant depth of seismic data”, formed part of the recommendations from last week’s Providence Resources/PwC study into the potential of the Irish offshore sector, this seismic tender has been in the Government’s plans for nearly a year.

There has been speculation that Eni could be signing up to invest around €70m in carrying out the study, but the Department of Communications, Energy and Natural Resources has been tight- lipped over the details.

A department spokesperson said that the procurement process has concluded and project planning is at an “advanced stage”. “It is anticipated that an announcement will be made shortly,” they added.

Minister of State at the Department, Fergus O’Dowd, first announced the intention to tender for a seismic data specialist to undertake the detailed survey last year, when addressing the Atlantic Ireland Conference in Dublin.

Speaking then, he said that such a survey would be “a huge step forward” and would go a long way to revealing the true potential of Ireland’s frontier basins.

The real genesis of the programme was the Government’s 2011 Atlantic Margin Licensing Round, which attracted a positive response from industry but still resulted in large areas on offer receiving no applications, despite being located in basins containing proven petroleum systems.

A lack of available seismic data was viewed as a significant contributing factor that needed to be addressed, according to Government. The small number of exploration wells drilled in Irish waters, over the past decade, has been blamed on low levels of available intelligence, with poor seismic data coverage previously described by Government as “the biggest impediment to exploration”.

Last week’s PwC study into the potential of Ireland’s offshore exploration industry suggested that thousands of jobs could be created per year and the Exchequer could significantly increase its annual corporate tax take if certain existing barriers to entry, for overseas players, are removed.

“The oil and gas industry has the potential to transform local and national economies, but a critical mass of activity is needed before a substantial indigenous supply base can develop,” it said.

Extract From http://www.irishexaminer.com/business/contract-to-assess-oil-potential-231055.html

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Europa acquires licence for South Porcupine basin, offshore Ireland.

Posted: April 19, 2013

From Offshoretechnology.com 19/04/2013

Europa has signed a farm-in agreement with a subsidiary of Kosmos Energy to acquire its two Licencing Options, LO 11/7 and LO 11/8, in the South Porcupine Basin, offshore of Ireland.

As part of the deal, Kosmos will buy an 85% interest and take up the operatorship of both licences, alongside incurring 100% of the costs of the first exploration well on each block.

The company will also fully fund the cost of a 3D seismic programme on each licence and pay 85% of the costs incurred by Europa to date.

The first exploration wells on LO 11/7 and LO 11/8 have investment caps of $90m and $110m, respectively, while Kosmos will share 85% of the excess costs of the investment cap, with the remaining coming from Europa.

Both LO 11/7 and LO 11/8 cover an area of about 1,000km² each in the prospective South Porcupine basin, while the licences have been mapped using existing 2D seismic data and are currently undrilled.

“The company will also fully fund the cost of a 3D seismic programme on each licence and pay 85% of the costs incurred by Europa.”

Europa has identified two previously unknown prospects in the Lower Cretaceous stratigraphic play – Mullen in LO 11/7 and Kiernan in LO 11/8.

Europa CEO, Hugh Mackay, said Kosmos is an experienced operator in frontier basins and pioneered the Cretaceous stratigraphic play that lead to a major exploration success in the Atlantic margin basins.

“The farm-in provides recognition of the substantial potential value lying in our Irish exploration prospects. The work programme associated with the farm-in has the potential to deliver significant value realisation,” Mackay added.

“Europa’s retained 15% interest exposes the company to substantial upside in the event of drilling success at either or both of these prospects at a much reduced risk and cost to our shareholders.

“We understand that the Eirik Raude rig is in Irish waters to drill Exxon‘s Dunquin well. An exciting new chapter in the exploration of Ireland is starting and we are delighted to be part of it.”

The closing of the farm-in agreement is subject to approval from the Irish Government.”

http://www.offshore-technology.com/news/newseuropa-exploration-south-porcupine-basin-ireland?WT.mc_id=DN_News

 

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