Exploration firm attacks tax rates

One domestic-based exploration firm has openly criticised the Government for its new tax rates for oil finds in Irish waters, just a week after they were unveiled.

Industry veteran John Teeling, chairman of Dublin-based Petrel Resources, which has operations off the west coast as well as in Ghana and Iraq, said that reducing monetary returns for firms will only result in a reduction in overall investment in Irish waters.

He added that the new fiscal regime could well result in viable Irish oil fields not being developed.

Last week, the Government raised (from 40% to 55%) the top rate of tax on profits made from any future oil find in Irish waters, while also introducing a 5% royalty revenue from each year of a producing field’s lifespan.

“It is unfortunate that the Government has decided to increase taxes and increase uncertainty before any drilling. There is now a question mark over all Irish hydrocarbon exploration, despite the statement of no retrospective changes to existing licences,” according to Mr Teeling.

Saying that, however, Petrel does intend to bid for licences in the newly opened Atlantic Margin 2015 licensing round, which isn’t set to close until September of next year.

Speaking yesterday, Mr Teeling said the firm is “actively looking at applying for more than one block” in the round.

Depending on results from an upcoming seismic survey, Petrel said drilling at its Irish operations in the Porcupine Basin, off the Kerry coast, should take place in 2016/17. The cost of the activity will be taken up by operator, Australian firm Woodside Petroleum, which farmed-into the asset earlier this year.

“The importance of a successful oil discovery offshore Ireland cannot be exaggerated. One oil discovery in the Porcupine Basin is likely to be big enough to supply all of Ireland’s oil demand, if not more,” Mr Teeling said.

Petrel yesterday reported pre-tax losses of €526,783 for 2013, 12% higher than its losses for the previous year. Regarding non-Irish assets, the company said its Iraqi partners remain in talks regarding authorisation for seismic activity, while Petrel is hopeful of finding a solution to its problem in Ghana, where part of its exploration block was awarded to a rival operator.