NZResources.com - December 2009
Posted in: Perspectives: Thursday, 03 December 2009
NZResources.com - 3 December 2009
By Richard Michael, Chief Executive of Straterra
As 2009 draws to a close the natural resources sector can look back on what has been a year of significant development for the industry - and look to 2010 with real optimism.
This Government has certainly taken a positive approach to New Zealand’s natural resource wealth and recognised the vital role it can play in our economic future. This, in turn, has had an energising effect on the sector.
While other sectors such as primary production play a larger role in our economy, these are unlikely to have the same ability that natural resources has to significantly ramp up production from current levels.
One only has to look at the significant effect on our balance of payments that oil now plays. Last year the output from two relatively small wells, Tui and Maari, was the country’s third largest export earner - and so far we have only scratched the surface in terms of this country’s oil and gas potential.
It was extremely encouraging to hear Energy and Resources Minister Gerry Brownlee’s recent announcement of an action plan to progress further development of our oil and gas resources, including data suggesting over $60 billion worth of oil and 40 trillion feet of natural gas lies off our shores.
The Minister estimated that, by 2025, tax receipts from this could be sufficient to wipe out the current cash deficit.
Equally welcome was his announcement that the Government is reconsidering the tax and regulatory framework of the petroleum sector to make investment more attractive for foreign oil explorers.
This is at an early stage, but the Government’s clear intent to take a really fundamental look at the oil and gas sector and willingness to seek the industry’s input, is real cause for optimism.
One of the issues that has hampered our oil and gas potential for many years was the perception, internationally, that government did not encourage exploration.
Given the long lead times and huge expenditure required to drill deep-water wells in wild seas, it’s not surprising that many explorers preferred to look at more favourable jurisdictions.
The Government’s action, coupled with other significant progressions such as changes to the Resource Management Act, which will have far-reaching effects and ease development of large-scale projects, will have sent a strong message to the international exploration community that New Zealand’s attitude is changing.
This is already paying dividends - this summer will see the most oil exploration ever undertaken in New Zealand waters.
It is important to emphasise that New Zealand - like Canada - can continue to live up to its clean green image while enjoying the population-wide benefits of its natural resources.
Our industry practices world class environmental management. Not only is this vital to our tourism sector and to all New Zealanders, giving us a social licence to operate, it is also fundamental to attracting investors and building relationships with communities.
However, while wooing international explorers is essential, the industry would also like to see the attitudes of New Zealand investors change.
To date there has been a poor record of raising money onshore. Currently most of the investment in natural resource development in New Zealand still comes from Australia, where natural resources has a long history and is accepted as a mainstream investment area.
ENDS