Oil and gas companies will spend up to $2.3 billion on almost 90 new oil exploration and production wells between 2013-16. According to a Government research paper, even a modest find could see national employment in the oil and gas industry almost triple.
New Zealand's oil exploration and production is currently all in the Taranaki region on the west coast of the North Island. New onand offshore fields in this region continue to drive the industry, along with exploration work in other locations around the country. New Zealand now holds rights to some 5.7 million square kilometres of ocean and seabed (22 times its land area) containing 18 known sedimentary basins.
From a global perspective, New Zealand is a frontier oil and gas location. Its lightly explored basins, low-risk and straightforward entry and permitting process have seen it attract significant momentum around the oil and gas industry.
Significant resource potential and underexplored basins
All of New Zealand’s producing oil and gas fields are currently in the Taranaki region, which remains a focus for exploration. However, 17 other basins are likely to yield significant finds. Much of the recent and intended investment in exploration is focused on these underexplored or yet-to-be explored basins.
The fiscal regime governing energy production is favourable, and comparable to the best current regimes in western Canada. Oil and natural gas production is subject to a 5 percent royalty until recovery of capital costs, followed by a 20 percent net accounting profits royalty. Energy companies are also subject to 28 percent corporate income tax, with tax treatments in place to avoid double taxation. Unlike many international settings, New Zealand has no ‘back-in’ clauses to impose unearned working interests or production-sharing requirements on domestic or foreign energy companies.
New Zealand offers investors complete energy infrastructure as a result of years of oil and gas production along with a well-established geothermal industry, which uses similar field equipment and components. In-country infrastructure includes oil and natural gas processing facilities, a domestic natural gas distribution system, an oil refinery, an oil export hub in the North Island, oil terminals at ports on both islands, and good highways and rural roads throughout the North Island.
Strong expertise to support the sector
New Zealand has a long history in the oil and gas industry that dates back more than 150 years. Significant offshore interest has returned to New Zealand, thanks to improved offshore exploration technology (including floating LNG).
Seismic and interpretive data available
The New Zealand Government is committed to open data and transparent processes, and supports the oil and gas industry with up-to-date prospective data.