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* Committee recommends 25-40 pct rate be doubled
* Interest increasing in country's oil potential
* Energy minister says must be realistic about prospects
DUBLIN, May 14 (Reuters) - Ireland's energy ministerlaunched a review of the country's low tax rate on oil and gason Tuesday, but cautioned that it would need to maintain aregime that encouraged more exploration in its unproven waters.
Hopes that oil production could provide revenue for adebt-laden government and a path towards energy independencepicked up last year after Irish explorer Providence Resources reported the first commercially viable oil-flow rate atits first drilling target, Barryroe.
However ill-fated past projects and the fact Ireland doesnot yet have a major commercial field have prompted a cautiousapproach towards tax comprising of a 25 percent corporation taxand a resource rent tax of zero to 15 percent of profits.
After a parliamentary committee recommended that the ratefor future licences be increased to a minimum of 40 percent anda Norway-style 80 percent for larger projects, Pat Rabbitte,minister for communications, energy and natural resources, saidhe would conclude a review by the end of the year.
"While I have clearly indicated my reservations aboutNorwegian style tax terms, I am conscious that long-terminvestment decisions on exploration expenditure would benefitfrom the maximum degree of certainty on the stability of thefiscal regime," Rabbitte told parliament.
"With that in mind and having regard to the fact that thelast review of the fiscal terms was in 2007, it is my intentionto seek further independent expert advice on the"fitness-for-purpose" of Ireland's fiscal terms."
Rabbitte added that any adjustment to the tax rate would notbe retrospective, thus not effecting Providence's activities atBarryroe where it is seeking a partner to help foot the bill ofup to $1.7 billion to get the field into production.
Fellow Dublin-based explorer Petrel said on Tuesdayit was also in talks about bringing in help to fund drilling offIreland's coast, while Fastnet Oil & Gas is also inthe process of trying to find a partner for its Irish licences.
Having sparked the interest of some of the world's biggestoil companies, such as Exxon Mobil, Rabbitte indicatedthat any change that would be in put place for Ireland's nextlicensing round in 2014 or 2015, would likely be modest.
"I do not wish to be negative, or to undersell Ireland as alocation for exploration investment - quite the contrary - butwe must deal in realities," he said.
"The reality is that the Irish offshore is under-exploredand its petroleum potential is largely unproven, particularlywhen compared with other petroleum regions such as Norway andthe United Kingdom."
