The Wealth Beneath Our Feet - full report (6.4 MB ... - Venture Taranaki

••Being global the O&G industry has contributed to thevibrancy of the region, attracting skilled workers andtheir families from around the world.••The concentration of the industry in Taranaki hasenabled the region to develop a reputation and brandfor O&G-related activity, allowing local companies tocompete on the global stage.••The specialist and exacting requirements of the O&Gindustry have seen the capability of individuals,businesses, and industries improve, resulting ininnovation and expansion.••The industry has catalysed advancements intechnology, as well as fostering greater understandingof our natural resources, careers, science, researchand engagement from a multitude of disciplines.••The Exploration and Production (E&P) companieswithin the industry have contributed to theTaranaki region in terms of supporting social andenvironmental activities.The O&G industry has unique traits. It is a high risk / highreward industry, operating around the world, often inchallenging locations with variable conditions. Activity ispurely driven by oil and gas prices and the ability to makean attractive profit on investments. The industry dealswith hazardous materials and so has exacting proceduresand standards to ensure safety.The reputation that Taranaki is continuing to buildmeans that New Zealand has an opportunity toparticipate in this industry beyond merely capturingroyalties and corporate taxes.Because of the scale of the investment, and the technicalcapability required, it is extremely difficult for small“unknown” companies to get “into” the O&G supply chain.There are clear synergies for O&G service providers tolocate in close proximity to each other and key clients.Further, current activity in New Zealand is too variableto support an effective O&G support and serviceindustry – the New Zealand industry needs to beparticipating internationally.Currently, New Zealand companies arecapturing between 30 and 80 percentof the construction of major O&Gprojects occurring in New Zealand.While they can never capture 100percent of projects, there is potentialto capture more.There are a number of ways that the industry canaddress the peaks and troughs in activity thatconstrains the growth of O&G companies. Growthopportunities will come from:••further O&G activity in Taranaki or New Zealand;••O&G opportunities overseas; or••diversification into other industries.The major factors constraining growth of the widerindustry in New Zealand are:••an ageing workforce;••reputation and ability to secure major projects –particularly offshore; and••higher cost structures relative to other industries.Further exploration and production activity inNew Zealand will go some way to overcoming theseconstraints. But there are other ways that the industrycan be proactive such as through:••diversifying into other areas, such as geothermalenergy, where the industry can manage the variabilityof activity;••collaborative efforts, where New Zealand companiescan compete for international projects in niche areasas a formal collective; and••better specification, where O&G companies canimprove competitiveness in other industries.The report recommendations are:••changing New Zealand’s philosophical definition of theoil and gas industry••building stronger partnerships to foster the industry••shifting the Government partnership modelThe Wealth Beneath Our Feet5