New Zealand’s Energy and Resources Minister, Gerry Brownlee, has announced the government's action plan for maximizing the development of the country’s oil and gas resources, which will involve changes to its petroleum tax regime.
"This government is committed to implementing a proactive and targeted plan to ensure that New Zealand is a highly attractive global destination for petroleum exploration and production investment," said Brownlee at the Biennial NZ Oil and Gas Outlook 2009 conference in Wellington.
"New Zealand's largely unexplored petroleum resource could be one of the country's most significant economic opportunities. A successful and flourishing petroleum industry will be a significant and essential contributor to lifting New Zealand's economic performance going forward," he continued.
He added that currently the petroleum sector accounts for around NZD3bn (USD2.2bn) annually of New Zealand's export revenue. The government received approximately NZD965m, including taxes paid, from petroleum production in the 2008/09 financial year. NZD543m of that was in royalty payments alone.
Should the estimated resources in New Zealand’s unexplored offshore deepwater basins be developed, it is said that export revenue could increase to NZD30bn per year by 2025. The government’s receipts could increase to more than NZD10bn annually over the next 40 years.
"The immediate focus must be on increasing exploration activity and improving the knowledge of our petroleum basins,” Brownlee continued. “The government must be seen as pro-development of petroleum resources to attract major investments of global capital to support exploration activity.”
In a request for public comment on the proposed action plan, the government has released five reports it commissioned on various aspects of the development of the oil and gas sector. As Brownlee confirmed that, from the government's perspective, taxation and royalties are a key part of a successful petroleum investment regime, one of those reports, produced by the Aberdeen University Petroleum Economics Consultants (Aupec), was entitled an “Evaluation of the Petroleum Tax and Licensing Regime of New Zealand.”
“Over the past few months,” Brownlee said, “Aupec have worked closely with my officials and shared their expertise in areas such as international energy policy and taxation, comparative modeling and design of fiscal regimes and production sharing contracts, design and review of petroleum laws and petroleum revenue management.”
He was “pleased to say that Aupec concluded that New Zealand's petroleum regime is generally fit for purpose and already provides an attractive investment climate for potential investors. However, they do recommend refinements to our current regime that would further promote exploration and production investment and ensure a fair and equitable return to the government from its petroleum estate.”
“This includes assessing taxation arrangements around marginal fields and ensuring that our permitting regime provides the government with sufficient opportunity to influence how individual fields are operated.”
In response, the government will make necessary adjustments to the country’s regulatory, royalty and taxation arrangements for petroleum. These will be completed by December 2010.
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