27 Oct 2016

Oil and gas royalties plummet

6:58 am on 27 October 2016

Earnings from oil and gas royalties have fallen again, according to the Ministry for Business Innovation and Employment's annual report.

An oil tanker at Marsden Point.

An oil tanker at Marsden Point. Photo: RNZ / Lois Williams

The government earned just over $193 million for the year to June 2016.

That's down about $65m on year ago, when royalties came to $258m.

The fall is being blamed on low oil prices, which are netting the government less money in pro rata terms as well as discouraging oil exploration in the first place.

In the 2008/2009 year, the Crown earned a massive $542m fee from oil and gas royalties helped by strong production from the Tui offshore oil well.

At the time, that sort of money would have been enough to pay the annual cost of a medium to large district health board, but today it would fund about a third of that.

Petroleum and gas royalties are levied on the basis that the resources in the ground originally belonged to New Zealand as a whole.

Under that logic, companies making a private profit out of it should have to pay something to the state for doing so, especially as an oil and gas resource is gone forever as soon as it is pumped out.

Oil and gas royalties since 2004/5:

  • 2004/05 - $114,341,205
  • 2005/06 - $125,132,961
  • 2006/07 - $110,318,903
  • 2007/08 - $124,150,772
  • 2008/09 - $542,959,260
  • 2009/10 - $431,892,264
  • 2010/11 - $384,509,813
  • 2011/12 - $360,612,601
  • 2012/13 - $407,317,898
  • 2013/14 - $371,002,926
  • 2014/15 - $258,360,000
  • 2015/16 - $193,428,000

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