Govt may back down

Press, 12 October 1976, Page 1

Govt may back down

PA Wellington The acting Prime Minister (Mr Talboys) will meet oil company representatives today to hear criticisms of the Government’s $3-a-barrel levy on oil produced in New Zealand.

Yesterday, Mr Taiboys indicated that the government might amend the levy.

He said the Government would assess the situation in the light of the representations received and it might be possible to make some changes which would meet needs as outlined. The Government wanted, hoped, and expected the search for oil in New Zealand to continue.

He disclosed that the Government had had in mind "windfall” profits made by the oil companies

as a result of the increase that had taken place in the price of oil. As he understood the position the companies would get the world market price for any oil produced in New Zealand and this applied to the production of condensate from the Kapuni field. Mr Taiboys said he and other members of the Cabinet had received representations from the oil companies after the announcement on Friday that the levy would be imposed as part of the Government’s new energy policy. He agreed that Friday’s announcement could be regarded as "an energy pricing” announcement and said the remainder of the policy would be made public as it was developed. Our Wellington reporter says the oil companies object strongly to the levy because they consider there should be the maxi-

mum incentives for locallyproduced energy, while the levy will provide maximum disincentives.

“The trouble with the new energy policy is that it does the opposite of what it is intended to do and leads to the introduction of more imported oil,” according to the managing director of BP New Zealand, Ltd (Mr J. C. Fair). "This levy acts as a disincentive for the exploration of oil within New Zealand, and the discovery of oil in New Zealand would be the greatest relief the country could have from the costs of imported oil.

"Also, putting up the prices of all other energy products except oil must have the effect of pushing fringe operators not using oil into the use of oil, which makes New Zealand even more dependent on imported oil,” he said. “Maximum incentives for local energy production are needed, but the Government’s policy does the reverse.”