The introduction of a new petroleum production tax at a time when oil prices are at a low will likely deter companies from exploration activities in Ireland, PwC has warned.

Speaking ahead of the Atlantic Ireland Petroleum Conference, which takes place in Dublin today, the consultants’ partner for oil and gas, Ronan MacNioclais said the changes “sent the wrong message to industry”.

Announced as part of last week’s Finance Bill, the new regime – which will see the maximum tax on oil and gas fields rising to 55 per cent from 40 per cent – replaces the profit resource rent tax introduced in the 2008 Finance Act.

It is intended to ensure discoveries made under future exploration licences will lead to an increased financial return to the State and earlier than under existing arrangements.

Mr MacNioclais said the introduction of the tax would raise questions about the Government’s support for a viable petroleum industry in Ireland.

He also claimed it could result in perceptions of Ireland having a higher geopolitical risk than other exploration locations.

“It is a very significant change with important implications for a range of industries performing work in the Irish continental shelf,” said Mr MacNioclais.

According to PwC’s 2015 oil and gas report, 48 per cent of survey respondents said they were planning to defer or significantly curtail exploration investment in Ireland due to low oil prices.

In addition, 70 per cent said they believed the new fiscal regime should be deferred or revised.