The Irish Government has warned the country could have to subsidise imported oil if prices drop again.
The Government is to unveil its oil subsidy plans for the coming years when it announces its economic strategy next month.
The oil subsidy is currently being phased in over the next four years, but has not been implemented in full.
In 2017, Ireland received an average of €2.5 million a year from the EU.
However, since the oil subsidy was introduced in 2020, the amount has been reduced by around €1 million a month.
Currently, the Government receives around €7 million a week from the oil industry.
The Irish Oil Council said that if the subsidy is not fully implemented next year, it could see the amount of funding available for Irish oil companies fall to less than €1.5m a year.
It added that it would be difficult to get the subsidy to work, with some oil firms being unable to borrow money for oil and other products, as they cannot access capital markets.
Mr O’Connor said it was clear the Government was looking at ways to ensure that there were no further reductions in the amount it provides for the oil and gas industry.
He said it would have to decide if there is a viable alternative.
He added that a large number of companies are operating under the assumption that they would have the support of the Government.
However Mr O`Connor said there is “no question” that this would have a negative impact on the oil sector.
He explained that as a result of the changes, there would be a reduction in investment, with companies operating with a large capital base.
He also warned that the Government would be able to see the effects of any changes on its investment decisions.
Mr D’Arcy said the Government’s announcement was “a significant step forward”.
He added: “The Government has listened to the concerns of the oil producers, and the Government has taken action to ensure we do not put undue pressure on the sector and the industry to continue to grow and increase our oil production.”
The Government’s plan will ensure that the oil market is well balanced and that we provide certainty and stability for our consumers.
“This plan is a reflection of the seriousness with which we have taken the oil price issues and is a response to the strong reaction from Irish industry.”
The Government’s oil and natural gas subsidies are estimated to generate around €15 billion a year for the Irish economy.