NZ Government Turns to Oil for Deficit Solution
In a speech made by Gerry Brownlee, New Zealand Energy Minister, on November 18th, it has been made clear that the New Zealand Government is actively setting its sights on the petroleum and gas industry to help fix its budget deficits.
Gerry Brownlee made comment about oil being New Zealand’s third largest export in 2008, netting NZ$2.8 billion. He also said that the industry is experiencing heavy expansion with exploration projects being carried out in numerous possible fields across New Zealand. If conservative estimates of the oil potential of the explored fields are recognized, the petroleum export sector could see an extra NZ$30 billion per annum by 2025. According to Gerry Brownlee, this could translate to an extra NZ$10 billion in tax receipts for the government for the next 40 years. Such revenues, according to the Energy Minister, would be adequate to make a significant impact on the government’s deficits.
To attract investors into the New Zealand petroleum sector and make these estimates a reality, Gerry Brownlee revealed the Government’s new seven point “Action Plan”. First, the government will continue to explicitly support petroleum expansion. Secondly, the government will make large investments to research of petroleum industry efficiency. Thirdly, a review will be completed by May 2010, looking at the Crown’s capability to manage and resource the expanded petroleum estate. Fourth, a review is due by June 30th regarding the improvement of data quality provide by the petroleum industry to the Government. Fifth, another review will look at arrangements held for royalties, taxation, regulation and other arrangements for the petroleum industry. Sixth, improvements will be made to current legislature regarding petroleum. Lastly, work will also be done to improve New Zealand’s situation with gas hydrates.