Developing another oil and gas basin in New Zealand could grow exports by $1.5 billion a year and create a further 5,500 oil jobs, according to a Government report.
A new paper released today by the Ministry of Business, Innovation and Employment (MBIE) looked at the potential benefits of oil and gas in terms of export growth, GDP growth, Government revenue and regional development opportunities.
New Zealand currently had only one producing petroleum basin in Taranaki.
Developing a second could have major outcomes for the country, said Simon Lawrence, MBIE manager of resources.
“Exports could grow by $1.5 billion per annum, royalty payments increase by $320 million per annum, and a further 5,500 jobs created,” he said.
A new basin could also, through direct and indirect effects, boost national GDP by an average $2.1 billion each year of a 30-year development.
It was estimated that a single field could generate between $557 million and $3.2 billion in regional GDP over that time.
“While the scenarios are hypothetical, the potential for growth of the oil and gas sector is real.
“There is reason to be confident that ongoing exploration investment will lead to new field discoveries and that local economies can benefit from such developments.”
According to GNS research, New Zealand had sovereign rights to a land area of 270,000 square kilometres and more than 5.7 million square kilometres of seabed.
Today’s report states that the oil and gas industry generated about $400 million in annual royalty and around $300 million in annual company tax revenue for the government.
Analysis by Edison Investment Research in its inaugural New Zealand Petroleum Sector Yearbook, out last week, found that nearly $7 billion had been invested in the oil and gas sector during the past five years.
“No other local sector comes close to matching the magnitude of this investment in new productive capacity,” the report said.
The yearbook found that exports from petroleum sales in 2004 totalled $502 million but by 2008 this had surged five-fold to $2.63 billion.
Despite falling production at the offshore Taranaki Tui field and the collapse of the oil price at the height of the global financial crisis, exports remained above $2 billion for each of the past three years.
Oil was New Zealand’s fourth-largest merchandise export.
The report comes in the same week as legislation regulating deep sea oil drilling inside New Zealand’s Exclusive Economic Zone (EEZ) passed into law.
The Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act passed its third reading, with 72 votes in favour and 49 votes opposed.
The Act establishes a framework for permits allowing oil, gas and mineral exploration and extraction in New Zealand’s exclusive economic zone, which lies between 12 and 200 nautical miles off the coast.