Good Oil 1: Oil shortfall creates balance of payments blowout - E&Y

Australia's dependence on oil imports will double in the next 10 years, which will put further pressure on the nations' balance of payments, according to Ernst & Young Managing Partner Michael Minosora.
Good Oil 1: Oil shortfall creates balance of payments blowout - E&Y Good Oil 1: Oil shortfall creates balance of payments blowout - E&Y Good Oil 1: Oil shortfall creates balance of payments blowout - E&Y Good Oil 1: Oil shortfall creates balance of payments blowout - E&Y Good Oil 1: Oil shortfall creates balance of payments blowout - E&Y

Minosora, who will deliver the keynote address at next week's Good Oil Conference in Fremantle on Monday, will urge State and Commonwealth governments to provide the framework and greater incentives for oil exploration in Australia to meet the nations' growing energy demands.

"In 2003, Australia produced 75% of its domestic demand for oil. By 2010, domestic production will only meet 50% of local demand. That shortfall substantially increases our exposure to world oil prices and will have significant implications for our national security and balance of payments," said Minosora.

Minosora, who heads Ernst & Young's Western Australian practice, said "the Federal Government's National Energy Policy is now one year overdue. The National Energy Policy is vital to provide the necessary policy framework to ensure the sustainable development of Australia's energy resources."

Furthermore, he warns that without taxation and investment incentives for Australian exploration companies, the local exploration sector will not be able to attract the finance required to find and develop more oil resources for Australia.

Access to land for exploration and access to capital for project development are the two most important issues facing Australian mineral and petroleum explorers.

"Access to land" issues will not be resolved unless a workable solution can be found to the Native Title Act, particularly on the right to negotiate and the problems associated with amalgamated native title claims.

"Access to capital" issues require government taxation incentives to promote increased expenditure on mineral and petroleum exploration by Australian companies, similar to tax concessions for R & D expenditure. Flow-through share schemes are another initiative designed to promote institutional and retail investment in local exploration projects which are capital intensive and often have long lead times to reach production. Australian governments need to create an environment which recognises and supports our exploration sector's important role in finding and developing new opportunities," said Minosora.

The Good Oil Conference is Australia's premier annual oil and gas exploration industry event, and is attended by Australia's leading exploration companies.

The conference is being held at the Western Australian Maritime Museum in Fremantle, 8 - 9 September 2003.

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