OFFSHORE EXPLORATION companies will invest $300 million (€193 million) on drilling activities in Irish waters this year.

Up to seven wells are planned for 2008, compared to no exploration wells in 2006 and an average of one to two wells per year in earlier years of the decade, the Irish Offshore Operators Association said yesterday.

While 2008 will be the most active year for exploration off Ireland since 1978, it will also be the most critical for the future development of the industry here, it said.

"This industry hasn't had much success to date," said association chairman Fergus Cahillat its annual briefing. "The next couple of years are going to be very important for the industry in general and we are at a critical period."

On average, one in 40 exploration wells drilled in Ireland over the past 30 years has been commercial. This is two to three times lower than the success rate enjoyed by Norway and Britain. Ireland currently has three producing fields - Kinsale, Ballycotton and Seven Heads - compared to approximately 350 in Britain and 62 in Norway.

Ireland's proven reserves are 114 times lower than in Norway and 99 times lower than in Britain.

The controversy over the Corrib gas line has added to the problems of Ireland's low success rate, according to the association.

"I think it is fair to say it has influenced companies' decisions on whether they should invest more funds in Ireland going forward," said Statoil Hydro's Ireland manager Peter Smith.

However, Mr Cahill said recent encouraging discoveries - while not yet declared commercial - have stimulated interest in the Celtic Sea and off the west coast.