A strengthened focus on the oil and gas sector has led to the creation of a larger and more high-profile Crown Minerals Group within the Ministry of Economic Development.Energy and Resources Minister Gerry Brownlee announced at the opening of the New Zeal
A strengthened focus on the oil and gas sector has led to the creation of a larger and more high-profile Crown Minerals Group within the Ministry of Economic Development.
Energy and Resources Minister Gerry Brownlee announced at the opening of the New Zealand Petroleum Conference this morning that the new unit will have a more commercial and strategic approach that better meets the needs of industry and government.
He said the unit would be a key driver of an integrated petroleum investment strategy based on geoscience knowledge and promotion investment, which the government is developing.
The expansion of Crown Minerals comes after an independent review found a significant increase in the government’s capability is required to deliver on the objectives of the Petroleum Action Plan, as well as the government’s objectives for the development of other mineral resources.
Crown Minerals currently operates on about 40 fulltime equivalent positions – yet is responsible for managing the asset base that drives New Zealand’s fourth largest export earning industry.
“If other industries in New Zealand operated on a similar ratio, we’d be a very wealthy country,” Mr Brownlee said.
“If we are going to see an expansion of activities here, we need to have a regime that is fast and responsive and I’m critically aware that people have suggested that things don’t move as quickly as they could.”
The government will establish an advisory board to oversee the new unit, initially on an informal rather than statutory basis.
It is likely that some board members – ideally “independent senior executives with international and local experience in the petroleum and mineral sectors” will be sourced from offshore.
Mr Brownlee was unable to provide precise estimates of the cost of the Crown Minerals expansion but told reporters that it would “not be all that considerable, given the revenue that comes from the petroleum estate.”
National oil company floated
It appears rumours of a national oil company proposal are circulating within the industry.
During his conference address, NZ Oil and Gas chief executive and managing director David Salisbury said that he understood that there was “ongoing consideration of a national oil company” for the benefit of New Zealand.
The focus of the national oil company would be to stimulate exploration activity, particularly outside Taranaki.
Mr Brownlee told media that he was “a bit surprised” by Mr Salisbury’s comments.
“I guess there are a number of people around who think that’s a good idea but it’s not something that the government is considering at the moment.”
Brownlee – carbon charge OK
Mr Salisbury applauded the government’s repeal of a ban on new thermal generation, which had placed a significant burden on the gas industry.
But he thought that the emissions trading scheme had placed an undue burden on producers – with pass-through cost implications for the rest of the industry.
At worst, he said, the regime is a “substantial new tax” – and at best, will lead to difficult commercial negotiations and even litigation between industry players.
Mr Brownlee told reporters that New Zealand’s ETS “doesn’t appear to be damaging our economy at the present time.”
He compared New Zealand’s regime with Australia’s most recent $7 billion budget allocation for carbon mitigation activity.
“We believe our carbon charging opportunity is going to be a less expensive way for New Zealand to discharge our obligations,” he said.
Mr Salisbury was happy with the government’s current fiscal regime for the sector, including tax and royalty arrangements.
