Oil and gas industry optimistic in New Zealand
Although New Zealand’s specific upstream fiscal and regulatory terms are unlikely to change in the near future, the sector’s exposure to wider economic policy is a risk, says research and consulting firm GlobalData.
According to the company’s latest report (New Zealand Upstream Fiscal and Regulatory Report), the current fiscal terms of New Zealand’s upstream oil and gas industry will remain attractive, with a government take of around 45 percent. However, the country’s upcoming general election in 2014 could pose risks relating to the upstream sector’s exposure to more general policies, with possible increases in the tax burden.
At present, the only petroleum producing area in New Zealand is the Taranaki Basin, but New Zealand Petroleum and Minerals is hoping to increase interest in exploration through its new system of Block Offers, which could bring positive results to the upstream sector. However, potential tax increases could harm these plans.
The greatest potential change in fiscal terms may lie with the corporate income tax (CIT) rate. Upstream oil and gas companies operating in New Zealand pay the general CIT, rather than a specific petroleum tax, so tax rates are more likely to be affected by broader economic trends.
Furthermore, while the government is currently embarking on a deficit reduction plan that focuses on lowering government spending, this focus may change depending on the upcoming election result.
“Polling currently indicated that combined, the Labour and Green parties possess a slight lead over the center-right National party, which is currently in power,” says Jonathan Lacouture, GlobalData’s lead upstream analyst for the APAC region. “If a center-left government forms following the next election, deficit-reduction plans would likely be rebalanced to give greater weight to tax increases.
“Based on recent Labour policies, the top rate of personal income and the capital gains tax are likely to represent the most immediate targets for these increases in taxes. However, moves by a new government may possibly be made to retract the decreased CIT implemented by the National party.”
The CIT rate has decreased from 30 percent in 2008 to a current rate of 28 percent. Lacouture says that the Green party may potentially influence policy by pressuring the government into introducing a carbon tax in lieu of the credits-system currently in place.
Hydrostor receives $4m funding for A-CAES facility in Canada
Hydrostor has received $4m funding to develop a 300-500MW Advanced Compressed Air Energy Storage (A-CAES) facility in Canada.
The funding will be used to complete essential engineering and planning, and enable Hydrostor to plan construction.
The project will be modeled on Hydrostor’s commercially operating Goderich storage facility, providing up to 12 hours of energy storage.
Hydrostor’s A-CAES system supports Canada’s green economic transition by designing, building, and operating emissions-free energy storage facilities, and employing people, suppliers, and technologies from the oil and gas sector.
The Honorable Seamus O’Regan, Jr. Minister of Natural Resources, said: “Investing in clean technology will lower emissions and increase our competitiveness. This is how we get to net zero by 2050.”
A-CAES has the potential to lower greenhouse gas emissions by enabling the transition to a cleaner and more flexible electricity grid. Specifically, the low-impact and cost-effective technology will reduce the use of fossil fuels and will provide reliable and bankable energy storage solutions for utilities and regulators, while integrating renewable energy for sustainable growth.
Curtis VanWalleghem, Hydrostor’s Chief Executive Officer, said: “We are grateful for the federal government’s support of our long duration energy storage solution that is critical to enabling the clean energy transition. This made-in-Canada solution, with the support of NRCan and Sustainable Development Technology Canada, is ready to be widely deployed within Canada and globally to lower electricity rates and decarbonize the electricity sector."
The Rosamond A-CAES 500MW Project is under advanced development and targeting a 2024 launch. It is designed to turn California’s growing solar and wind resources into on-demand peak capacity while allowing for closure of fossil fuel generating stations.
Hydrostor closed US$37 million (C$49 million) in growth financing in September 2019.