New Zealand considers new national company

The Government has considered setting up a company to allocate exploration rights for oil and gas in New Zealand in a bid to more aggressively manage resources. The idea of corporatising the petroleum functions of Crown Minerals is disclosed in a Treasury report dated May 2010, released last week during the debate about the future of state-owned coal miner Solid Energy. New Zealand's petroleum sector produces about $3 billion of export revenue per annum and this could increase to $30 billion per annum by 2025 if unexplored basins are developed, the report says. A Petroleum Action Plan launched in 2009 aims to make New Zealand attractive to global oil exploration companies, arguing the country's largely unexplored petroleum resources are its most significant economy opportunity. A company could be set up to allocate exploration rights and earn revenue from royalties and permit fees, Treasury says. The crown would be paid dividends, though revenue could be retained to pay for geo-science reports and promotional activities. The company would not directly participate in any developments. "This model would strengthen the incentives to aggressively manage the petroleum portfolio on a commercial basis," the report says. Solid Energy wanted to set up a natural resources company itself, which would have preferential access to New Zealand oil, gas and mineral resources. Treasury argued that Solid Energy had no experience in oil exploration and that New Zealand's international reputation would be damaged if a first right of refusal to energy resources was granted to a state-owned company. It would also breach trade treaties. The Government later decided to privatise Solid Energy but disclosed in February that the coal miner was in talks with banks to resolve a deteriorating financial position. 3news