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Dublin: Oil and gas companies are stepping up exploration efforts off Ireland's coast, lured by an attractive tax regime and higher energy prices.
Offshore projects in Ireland had been overlooked by many firms due to high costs and a lack of commercial finds since drilling first began in the 1970s.
But prospectors such as US major ExxonMobil and Norway's StatoilHydro now hope to strike it lucky in Ireland as access to new fields gets harder.
A study commissioned by the Irish government said early data showed potential reserves of 10 billion barrels of oil off Ireland's Atlantic coast.
Ireland remains vulnerable to global supply disruptions because it is at the end of Europe's pipelines, It has tried to woo oil companies with financial incentives and a series of offshore licensing rounds.
"The majors are looking for new places to explore and the favourable tax rate in Ireland makes it worth a punt," said Andrew Harwood, energy analyst at Wood Mackenzie.
Rising costs
Exploration companies pay 25 per cent tax in Ireland, which rises to 40 per cent for the most profitable finds - lower than the 50 per cent rate in the UK, 78 per cent in Norway and over 80 per cent levied in other regions.
The growing momentum is expected to result in offshore investment in Ireland of at least $250 million this year, according to industry body IOOA. While small compared to elsewhere, it will be the highest level since 1978.
"High oil and gas prices, improved deepwater technology and a safe political environment means that we can expect higher drilling activity in the future," Davy analyst Job Langbroek wrote in an investor note.
While the price of oil has fallen over 20 per cent from a record high above $147 a barrel in mid-July, prospectors are taking a longer-term view.
"The short-term nature of the spiking is not something that you could plan your exploration strategy around," said John Conroy, licence and operations manager with StatoilHydro's Irish unit, which has a number of offshore projects.
Exploration activity in Ireland has remained relatively slow with 177 wells drilled to date, compared with around 4,000 in the UK and around 1,200 in Norway.
While much of the drilling has centred around the Celtic Sea off southern Ireland, no oil has been produced yet.
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