The Government is to offer exploration licences to oil and gas companies in the Porcupine Basin, an area spanning 63,500 kilometres.

Applications for the licences are expected to be offered in May, with a closing date of late October.

Minister for Communications Noel Dempsey said the area was "frontier acreage" because of the challenging environment of the Atlantic.

The Irish exploration scene has undergone a major transformation over recent years, with global companies like Shell and Exxon Mobil carrying out drilling in Irish waters. However, so far Shell and its partners have failed to bring gas ashore from the Corrib field.

Rising oil and gas prices have made areas previously overlooked by the exploration companies very attractive. The companies are also more interested in drilling in deeper water than was previously the case.

Mr Dempsey said exploration drilling in Irish waters was badly needed. "Ireland needs an indigenous gas supply. At present we import more than 85 per cent of our gas requirements. This is in stark contrast to the position 10 years ago when about 95 per cent of our gas requirement came from indigenous supplies through the Kinsale field."

He said only five exploration wells had been drilled in the Porcupine area in the last 20 years, and although the area may have considerable potential it remained under-explored'.

He was reviewing "existing licence terms" and these would would have to be taken into account in the Porcupine round. He did not give details of what kind of changes were being contemplated.