New round of offshore licensing

The Government looks set to formally open its new offshore exploration licensing round next month, with it likely to run until the autumn of 2015.

Set to be its largest round in terms of interest from overseas players, the 2014/15 Atlantic Margin licensing round will be the first for three years and should lead to more clarity on a decision regarding tax terms for future commercial oil finds in Irish waters.

Six offshore licences were technically awarded during the first four months of this year. They were conversions of licensing options first awarded via the 2011 Atlantic Margin round, which had expired last November.

That development brings to 11 the number of options awarded in 2011 which have since been converted into full exploration licences by their holders.

Junior minister Fergus O’Dowd lifted the lid on the Government’s plans for its next licensing round last November, with full details expected in June.

International energy consultant Wood-Mackenzie was appointed by the Department of Natural Resources to look at the most viable exploration tax terms for the Government. While any major change from the current levels — the State stands to receive between 25% and 40% of profits from any commercial field in Irish waters — is unlikely, Energy Minister Pat Rabbitte is expected to receive the firm’s suggestions in June.

Earlier this year, Mr O’Dowd said the rising interest in offshore space had made it “timely and necessary” to review the existing fiscal terms, adding that more clarity will “ensure regulatory certainty” ahead of the new licensing round.

“It is important that the State provides suitable opportunities for international investors and provides the right environment to encourage industry to take the risk associated with investing in exploration,” he said.

While only one drilling round is scheduled off Irish waters this year, Mr O’Dowd said the number of entrants last year shows the offshore sector is “moving in the right direction”.

Currently, there are 643 mineral prospecting licences, held by 48 companies, in Ireland. The Government is hoping to make available — “in the not too distant future” — initial results from the €20m 2D seismic study of waters off the west coast undertaken last year on its behalf by Italian company Eni.