The New Zealand government is tasked with protecting and recouping the value of our natural assets on the behalf of all kiwis. To that effect, government has established a comprehensive set of rules and regulations that determine the nature of oil and gas exploration and production in New Zealand - maximising the benefit for the country.
are for New Zealanders
in the last decade from Oil & Gas
Apart from the absolute dollar value of royalties and taxes paid to the New Zealand government by oil and gas companies, kiwis benefit in many ways from oil and gas activity:
It’s true, many foreign companies have earned substantial profits by exploring and producing oil and gas in New Zealand.
However, the current royalty payment and taxation regime ensures that 42% of profit from most producing fields are returned to the New Zealand government. This is a substantial percentage of the profits of a field, especially given a number of limitations that exist for the New Zealand industry:
It’s also true that New Zealand has not always received as much return on its oil and gas resources as it might. Earlier royalty rates in the 70s and 80s reflected the underdeveloped nature of our oil and gas fields, and the greater attraction of oil and gas recovery in other parts of the world.
There was, and is, relatively little geological data about our 17 basins, making it more difficult for companies to assess commercial viability of any given field, and committing them to more intensive and expensive exploration operations.
Given the abundant availability of oil and gas around the world, foreign oil and gas companies were also less motivated to invest in unlocking New Zealand's relatively insubstantial and unknown resources.
Compounding the issue, our large deposits of natural gas were of little value to international companies seeking to sell oil on the international market. Natural gas was, and is, entirely consumed in New Zealand, leaving little motivation for foreign investors to develop fields that were highly likely to feature a large natural gas component.
While royalty and tax payments do accrue to the New Zealand government, local communities do benefit from oil and gas activity in many ways - from more and higher value jobs, busier towns and regions, and active communities.