Government incentives to generate increased exploration activity

14 June 2004 – The Crown has announced a package of incentives to increase the level of petroleum (gas and oil) exploration. A higher level of exploration is considered necessary to increase the probability that sufficient reserves of new gas will be found and brought to market…

The fact is that any oil exploration will be carried out by large multinational oil companies who will sell on the international market and keep most of the profit. Take Tui for example – only 12.5% owned by NZ Oil and Gas.

“Self sufficiency” in oil is a myth, and we aren’t going to get wealthy by reducing oil royalties. The only way to generate some kind of collective national wealth from oil would be for a Government oil exploration company to be formed, which I can’t see happening – oil exploration is too expensive and risky.

Rule #2 If it doesn’t move, drill it till it does move.

Rule #3 If in doubt, refer to Rule # 1.

cheers

David Prosser

If this oil wealth does indeed exist it could well spell the end of the Greens.

Can you imagine how the average Kiwi will react when they hear Comrade Norman tell them we should leave the oil in the ground and turn our backs on a far superior standard of living because it will be ‘good for the planet’.

>> You are absolutely right about the “average Kiwi” big bruv. But there will always be a constituency for the Greens, lurking in the student common rooms, and Nelson back block communes, people who have not yet had a proper job and still believe in tooth fairies, global warming and social credit economics.

Let’s hope they have the same positive attitude to the recommendations of the 2025 Productivity Taskforce when it reports back next week

The Sheikh of the south has for years been babbling Southland is about to become the new Gulf state. All on the strength of unproven petroleum reserves (which will almost certainly be gas if there are any) in the Great South Basin, an extremely challenging structure to explore, let alone harvest.

Fantastic! how do you know?!

About bloody time. I’ve been banging on to anyone that would listen for years that we are sitting on billions of barrels of oil!

And like Gerry, I am frankly amazed that previous governments havent done anything about this. (actually when i think about it, it was never really in the lefts agenda to make us wealthy, was it?)

If NZ wants to maximise the return and if the reserves are considerable they could create an SOE. A bit like Norsk Hydro (state is a major shareholder I think).

Also, we haven’t got subsidies on fuel right now, what makes you think that will happen in the future?

I was just responding to the idea from Dog_eat_dog. I don’t think we would do that, but it’s an interesting mental exercise to figure out why it’s a bad idea to ring-fence a resource and subsidise the economy with it.

The price of oil was controlled in the past as you describe, but now even OPEC can’t really control it. Not for long anyway. The market is more in control than ever. Which is why we’ve seen prices range from $20 to more than $100 in the recent past.

Yeah sure, but the extra wealth generated in NZ (say 30% of gross oil company revenue + related economic activity, jobs created etc) my be insufficient to cover the extra cost to the economy of not having the cheaper subsidised fuels.

Royalties on mineral wealth are generally in the order of 2-10%, not 30%.
Also, we haven’t got subsidies on fuel right now, what makes you think that will happen in the future?
The simple fact is that the price of oil is controlled so that alternative technologies are only just unattractive on an economic level. If we woke up one day and there were magic cars that ran on water, and cost 2c per 100km to run, you can be assured that the price of oil would drop substantially.

How about living within our means.

We don’t have the money for that. Anyway, why start now?

Haha yeah obviously a lot of people are spending this money already, must be a part of the oil companies’ PR strategy to get the public behind them

In the oil industry “estimated resources” means “wild guess with absolutely no evidence to support it”, when they find a little evidence they use the term “possible reserves”.