Ireland’s burgeoning offshore oil and gas industry has the potential to produce between 10,000 and 15,000 jobs per year and substantially increase the exchequer’s annual corporate tax take; but only if some existing barriers to entry for overseas players are removed, according to a new report.
The ‘Making the Most of our Natural Resources’ study — undertaken by PricewaterhouseCoopers (PwC) and commissioned by Providence Resources — claims that, with the right supporting conditions in place, if Ireland were to have 10 commercial Barryroe-style fields in operation, an average of 13,500 jobs could be maintained per year, during the average 10-year development phase, with 11,500 a year produced during the average 25-year production phase.
PwC also claims, in the newly published report, that even a single producing field, such as Barryroe, could bring in about €4.5bn in corporate tax and profit resource rent tax over its lifespan; which would equate to the Government’s total corporate tax take in 2011.
However, despite ExxonMobil beginning drilling off the west coast and a host of smaller independent international explorers increasingly looking at Irish waters, the report suggests more needs to be done in order to unlock the true potential of the industry here and attract more overseas players.
“Ireland is underperforming, relative to other European players, in the attraction of exploration investment from the oil and gas industry. This underperformance is partially attributable to factors beyond the control of policymakers, but there are important policy contributors. 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,” the study noted.
Ireland’s tax regime is seen as being “relatively favourable” compared to high-production countries, but its performance, in terms of commercial discoveries, remains weak, and the demand for licences is modest, PwC suggests. It added that Ireland is still seen as a less attractive location, by foreign explorers, than the likes of Britain and Norway, both of which have higher headline tax rates.
Also commenting, Providence Resources chief executive, Tony O’Reilly Jr, said that the report shows that if Ireland is to successfully exploit its hydrocarbon potential, “continued and significant foreign direct investment will be required”.
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