NO TALKS YET HELD ABOUT OIL ROYALTIES

Press, Volume XCVIII, Issue 29002, 17 September 1959, Page 16

NO TALKS YET HELD ABOUT OIL ROYALTIES

(From Our Own Reporter)

WELLINGTON, September 16. No talks have yet been held between the Government and the amalgamation of companies involved in oil exploration in Taranaki as to what will be paid as royalties in the event of a commercial flow being proved. A Taranaki newspaper recently suggested that the agreement between the exploring companies and the Government involved no royalty payment. The conclusion has been drawn in some quarters that the Shell. British Petroleum, and Todd Industries group will thus obtain possibly vast quantities of oil for nothing but the licence fee and costs of exploration and pumping. This is not so, according to the Minister of Mines (Mr Hackett) and the Under-Secretary of Mines •Mr C. H. Bonney). Mr Hackett's reply to questions asked tonight suggests that the owners of property on which oil may be found have a greater hope of remuneration than the Petroleum Act and its amendments may indicate. Position of Owners

“No discussions have taken place up to the present regarding royalties." said Mr Hackett. “If and when such talks do take place, surely the owner of the property must be considered.” Section 3 of the original Petroleum Act, 19’27, passed during the term of office of the previous Labour Government, says: “Notwithstanding anything to the contrary in any act or in any Crown grant, certificate of title, lease, or other instrument of title, all petroleum existing in its natural condition on or below the surface of any land within the territorial limits of New Zealand, whether the land has been alienated from the Crown or not. is hereby declared to be the property of the Crown.” It is stated later in this act that: “The rate of royalty to be specified in any licence shall be

fixed by the Minister when granting the licence, and shall not in any case be less than 5 per cent." Consulted earlier about the rights of the landowner in the case of an oil strike, Mr Benney said that the royalties would go to the Government, on the strict reading of the act. The owner, however, was entitled to compensation for the occupation of his land, and for any inconvenience caused. Costs and Royalties The actual costs to companies and individuals engaged in oil exploration are laid down as follows: Prospecting: An annual fee of 5s a square mile of the area prospected. Mining: Deposited as security. £2O a square mile, with a minimum of £250; annual fee, £lO a square mile. Royalties, calculated on a minimum, of 5 per cent, of the cash value of the product, would be in addition to these payments. If Mr Hackett's opinion is a reflection of Government intention, in any negotiations carried out after a commercial oil flow has been proved, the owners of the land involved will be granted part of the royalties paid to the Government.